Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of WD-40 (NASDAQ:WDFC) jumped as much as 12% this morning on a strong earnings report but were trading flat by the end of the session.
So what: The cleaning and maintenance-product maker said sales increased 7% to $93.1 million, while earnings per share went from $0.57 a year ago to $0.66, well ahead of estimates at just $0.56. The improvements were led by the multi-purpose maintenance segment, which grew 12%, encompasses the vast majority of sales, and includes the namesake WD-40 degreaser. The company also raised its full-year guidance, saying it now expects EPS of $2.40 to $2.48, up from a previous range $2.32 to $2.40. Analyst are predicting $2.39.
Now what: Given the strong results, the afternoon slide is a little surprising. By valuation standards, however, shares were already highly priced before the jump, with a forward P/E of 22, and the company is growing slowly, so further appreciation seems hard to justify. WD-40 is a strong brand, and a report like today's deserves an increase in share price, but not the 12% jump we saw earlier, considering its relatively limited opportunities.
Want more on WD-40? Add the company to your Watchlist by clicking right here.
Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.