WD-40 (WDFC, Financial) stock fell 5.93%, despite surpassing forecasts in its fiscal Q1 2025 earnings report, released recently. This decline comes as a reaction to guidance for the remainder of fiscal 2025, which seems to have tempered investor enthusiasm.
WD-40 reported earnings of $1.39 per share, exceeding analyst predictions of $1.26 per share. Additionally, sales for the quarter hit $153.5 million, representing a 9% increase compared to the prior year. The company's gross profit margin also improved, reaching 54.8%.
However, challenges remain. WD-40's selling, general, and administrative expenses increased by 14%, outpacing the sales growth. Advertising and sales promotions expenses rose by 20%, which has led to a modest rise in earnings per share, in line with the sales growth at 9%.
The market's response may be linked to the company's guidance for fiscal 2025. WD-40 anticipates sales growth between 6% and 11%, with a mid-point forecast slower than Q1's pace. Furthermore, the projected gross profit margin of 54% to 55% suggests a slight decrease from Q1's 54.8%. Expected earnings of $5.20 to $5.45 per share fell short of Wall Street's $5.36 target, showing only a 2% increase above fiscal 2024 earnings.
From a valuation perspective, WD-40 (WDFC, Financial) shows a price-to-earnings (P/E) ratio of 43.39 and a price-to-book (P/B) ratio of 13.31. This valuation reflects the company's strong financial position, underlined by a GF Value of $238.05 (GF Value), suggesting a "Fairly Valued" status. With its Altman Z-score of 12.94, indicating strong financial strength, and a Piotroski F-Score of 8 pointing to a healthy financial situation, WD-40 remains a financially robust company.
The company's growth has been consistent, with a revenue growth rate over the last year of 10.1%, and a five-year revenue growth rate of 7.9%. Despite the challenges in operational expenses, WD-40's predictable revenue and earnings growth continue to underscore its long-term potential. Additionally, the dividend yield is close to a one-year high, appealing to income-focused investors.
