WD-40 (WDFC) Rallies Strongly On Robust Second Quarter Earnings
Shares of WD-40 (WDFC), the maker of its namesake multi-purpose lubricant and other household products, rallied strong last week after the company reported solid second quarter earnings. For its second quarter, WD-40 earned $0.66 per share, or $10.5 million, up a penny from the $0.65 per share, or $10.6 million, it reported in the prior year quarter. Although profit slipped, its earnings per share advanced due to a higher quantity of outstanding shares in the previous year.
Revenue rose 0.85% to $86.7 million. Analysts had expected WD-40 to earn $0.56 per share on revenue of $87.37 million. Daily Chart
The San Diego-based company, which also sells cleaning products and carpet deodorizer, also stated that it was evaluating strategic options' for its household products business, which means that it may spin off or sell the business segment altogether. CEO Garry Ridge stated that the process was still in the early stages, and that no final decisions had been made. However, Ridge noted that it was a priority for the company to focus more on its core WD-40 business, its primary source of revenue, especially in the United States. WD-40 reported slower sales in the United States, which it is attempting to offset with stronger sales in Europe and an expansion into China and emerging markets. Ridge highlighted the company's turnaround in Europe, stating, "We are pleased that we have turned the corner in many of our European markets and have met our expectations in these markets despite continuing economic turmoil." This balance helped keep its revenue growth, although anemic, positive during the quarter. The addition of a "specialist" product line of its namesake product in 2012 helped the company boost sales during the quarter. This included its Bike Company division, which focuses on bicycle maintenance products for mechanics and cyclists. Looking forward, WD-40 forecasts full year 2013 earnings of $2.32 to $2.42 per share on revenue between $356 million to $370 million. Both its projected top and bottom line growth are in line with analysts' estimates, which call for earnings of $2.37 per share on revenue of $358.3 million. Last quarter, WD-40 grew its earnings 61.1% year-on-year, while revenue rose 12.10%. The company's profit margins have also held steady, at 11%. Shares of WD-40 trade at 20.96 forward earnings with a 5-year PEG ratio of 2.31, meaning that it's a slow growth stock that is considered overvalued compared to its industry peers, which have an average P/E of 12.9. However, the stock has risen 16.5% over the past twelve months, and it also pays a quarterly dividend of $0.31 per share - a 2.35% yield at current prices. Other News About WDFC WD-40's 2Q Beats Expectations
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Published on Apr 11, 2013
By Leo Sun