WD-40 Co. Earnings Preview

Investors braced for a bumpy ride ahead of WD-40 Co.'s (Nasdaq: WDFC  ) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Monday. WD-40 provides easy-to-use solutions for a wide variety of maintenance issues.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on WD-40 with analysts unanimously rating it hold. Analysts don't like WD-40 as much as competitor Stepan overall. One out of one analysts rate Stepan a buy compared to zero of five for WD-40. That rating hasn't budged in three months as analysts have remained steadfast in their opinion of the stock.
  • Revenue forecasts: On average, analysts predict $86.1 million in revenue this quarter. That would represent a rise of 6.4% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.54 per share. Estimates range from $0.50 to $0.55.

What our community says:
CAPS All-Stars are solidly behind the stock with 92.5% giving it an outperform rating. The community at large backs the All-Stars with 91.7% awarding it a rating of outperform. Fools are bullish on WD-40, though the message boards have been quiet lately with only 68 posts in the past 30 days. WD-40 has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
WD-40's profit has risen year over year by an average of 4.5% over the past five quarters. The company's revenue has now risen for two straight quarters. The company's gross margin shrank by 2.5 percentage points in the last quarter. Revenue rose 12.5% while cost of sales rose 18.2% to $47 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q4

Q3

Q2

Q1

Gross Margin

48.2%

49.3%

51.8%

50.9%

Operating Margin

16.6%

13.8%

17.5%

16.5%

Net Margin

11.2%

9.4%

11.5%

11.2%

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Earnings estimates provided by Zacks

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