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 WD-40 proves that average consumer goods are still doing well. WD-40 Earnings: Here's Why Investors are Buying Shares Now WD-40 shares rally strong on robust earnings. Other Stocks in the News When Quirky Hipsters Crush the Preppies How did Urban Outfitters conquer retail apparel? Baidu: After the Fall Can Baidu get back up after its epic fall? Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Apr 11, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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