Why WD-40 Stock Sank Today
Shares of rust and corrosion preventor WD-40 Company (NASDAQ: WDFC) -- famous for its blue-and-yellow canisters -- were down 7% as of 11 a.m. ET on Friday. This decline stems from the company's first-quarter earnings on Thursday afternoon, which fell short of analysts' expectations. Sales inched 1% higher, but earnings per share (EPS) slid 8%. Trading at 31 times earnings before the report, this sell-off is understandable, considering the stock's lofty valuation.While management reaffirmed guidance for 2026, the midpoint of its EPS projections leaves the company trading at 32 times next year's earnings, which means the company isn't blatantly "cheap," even after its stock has declined 34% since late 2024.
These results were underwhelming. However, there wasn't anything dramatically bad about them. In fact, I'd argue there are reasons for optimism. First, management's focus on premium products (such as its Smart Straw and EZ Reach) and specialty offerings (white lithium grease, gel lube, degreaser, silicone quick dry, contact cleaner, and more) seems to be paying off. Gross margins rose 140 basis points, and the specialty unit saw sales rise by 18%, so WD-40 is producing tangible results in these areas.
Source Fool.com
