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WD-40 Earnings: An Early Look

By Dan Caplinger - Apr 2, 2013 at 6:45PM

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Can the solvent-maker grease the wheels on its earnings?

The new earnings season is about to begin, but a few companies on off-quarter fiscal years are just now getting around to reporting their quarterly results. WD-40 (WDFC 1.69%) is about to release its earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Most people think of WD-40 as a single-product company, with its namesake solvent being ubiquitous with a place on just about every garage shelf in America. But the company does have a few other products in its arsenal. Let's take an early look at what's been happening with WD-40 over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on WD-40

Analyst EPS Estimate

$0.56

Change From Year-Ago EPS

(14%)

Revenue Estimate

$87.4 million

Change From Year-Ago Revenue

1.6%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will WD-40 get the job done this quarter?
Analysts have had mixed views on WD-40 recently, cutting back on earnings estimates for the just-ended quarter but boosting their full-year fiscal 2013 calls by $0.03 per share. The stock has done quite well lately, though, rising almost 14% since the beginning of the year.

WD-40 reaps the benefits of having its small niche largely to itself. But beyond its namesake product, it also makes Lava soap and 2000 Flushes bathroom cleanser, putting itself up against much larger consumer-oriented giants like Unilever's (UL 0.36%) Dove soap line and Procter & Gamble's (PG 1.53%) numerous cleaning products.

What may be surprising is the extent to which WD-40 has followed in Unilever and P&G's steps by looking to overseas markets for growth opportunities. Unfortunately, WD-40 has a much larger presence in Europe than in Asia, and given Europe's struggles, the company could face tougher times ahead until the economy there manages to rebound. That's consistent with Procter & Gamble's challenges overseas, although Unilever has done a good job taking advantage of P&G's miscues to tap into global growth prospects.

Still, WD-40 is never going to reach a scale even approaching its consumer-giant rivals. Rather, it has pigeonholed itself fairly well into what has been a successful niche for the company, albeit with only modest prospects for future growth.

In its quarterly report, watch for WD-40 to give details on how its $50 million share buyback program is going. With the company sporting impressive cash flow that has financed rising dividends lately, investors in WD-40 aren't looking for a quick score. Rather, as long as long-term prospects remain favorable, a small decline in year-over-year earnings shouldn't cause any huge disruptions unless it comes with future concerns down the road.

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Stocks Mentioned

WD-40 Company Stock Quote
WD-40 Company
WDFC
$186.88 (1.69%) $3.11
Unilever PLC Stock Quote
Unilever PLC
UL
$43.98 (0.36%) $0.16
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$148.72 (1.53%) $2.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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