WD-40 Stock Dips Despite Beating EPS Forecasts

WD-40's stock fell 6.3% despite exceeding EPS forecasts in Q1. The outlook for the remainder of fiscal 2025 is causing investor concern, impacting stock performance.

Date: 13-01-2025

AI Rating: 5

Overview of Earnings Performance

WD-40 (NASDAQ: WDFC) reported a fiscal Q1 2025 earnings per share (EPS) of $1.39, which surpassed analysts' expectations of $1.26 per share, marking a strong performance in this aspect. This positive result is a significant indicator for investors looking at short-term gains.

Sales and Profit Margins

Quarterly sales rose to $153.5 million, about 9% above the same period last year. The gross profit margin improved by 1 percentage point to 54.8%. These factors indicate good revenue growth and an efficient increase in the company’s ability to manage production costs, thereby enhancing profitability in the short term.

Concerns over Future Forecast

Despite these positive figures, WD-40's stock is under pressure due to cautious guidance for the rest of fiscal 2025. Management expects sales growth to be between 6% and 11%, which suggests a slowdown compared to the recent quarter. Additionally, they project gross profit margins to decline slightly to between 54% and 55%.

Management's anticipated EPS for the year is set between $5.20 and $5.45, which at the midpoint falls short of Wall Street's expectation of $5.36. Such a forecast is a cause of concern for investors, especially considering it only represents a 2% growth compared to the previous fiscal year, which may not justify the stock's current high valuation.

This blend of strong Q1 performance coupled with weak forecasts for the rest of the year has resulted in a cautious stance from investors, reflected in the recent 6.3% drop in stock price. Overall, while the company’s recent financial performance signals a stable business, the projected slowdown could weigh heavily on stock valuations in the near term.

Stocks: WDFC