Source: investing, 22/11/2024, Friday
On Friday, DA Davidson updated its forecast for WD-40 (NASDAQ:WDFC) shares, raising its price target to $322 from $303, with the purchase rating confirmed. The company’s sales in the fourth fiscal quarter showed an 11% year-on-year increase, beating expectations. Operating profit was in line with consensus estimates, although impacted by higher incentive compensation expenses.
The company’s guidance for fiscal 2025 indicates expected sales growth of 6% to 11% year-on-year.
which is more optimistic than the consensus estimate of 6%. Earnings per share are also expected to beat expectations.
with an expected increase of 9% to 14%.
compared to market expectations of 9% growth.%
The company plans to phase out the household cleaner business in the first half of fiscal 2025, expecting a reduction of annual sales by $23 million and earnings per share by $0.33. This led to a revision of the earnings per share estimate for fiscal 2025. However, the strategy implemented by the company’s CEO, Steve Brass, is credited with accelerating revenue growth.
DA Davidson started an estimate of earnings per share of $5.93 for fiscal 2026 and adjusted the target price based on a 53-times multiple of the estimated 2026 calendar year earnings per share of $6.07. This new target price reflects confidence in the future performance of the company and the expected positive impact of its strategic decisions.
In other recent news, WD-40 reported record fourth-quarter net sales of $156 million, marking an 11% year-on-year increase. The company’s full annual sales of the WD-40 SUV also saw sales rise 11%, to $453 million. The company showed improved gross margins and strong performance across global markets.
with significant growth in the EIMEA segments Asia and the Pacific.
For fiscal 2025, the WD-40 forecast net sales growth of 6% to 11%, targeting sales of $600 million to $630 million in constant currency. The company expects its operating income to be between $95 million and $100 million.
The company’s CEO, Steve Brass, highlighted the potential for $1.2 billion in global sales for the WD-40 mixed-use product. The ongoing phase-out of home care and cleaning brands in the Americas and the UK is expected to be completed in the first half of fiscal 2025.
potentially boosting annual gross margins by around 60 basis points. .
Despite a 4% year-over-year decline in sales in the U.S. and potential economic uncertainties.
the WD-40 remains optimistic about its future growth prospects. The company’s strategic focus on geographic expansion, shift towards luxury products, product growth.
and promoting digital commerce contributed to its strong performance for fiscal year 2024.
WD-40’s recent performance and future outlook are in line with several key metrics and insights from InvestingPro. The company has a market capitalization of $3.4 billion, reflecting its strong position in the industry. WD-40 revenue growth of 9.92% over the past twelve months and 11.06% in the last quarter supports DA Davidson’s observation of exceeding sales expectations.
InvestingPro’s advice highlights that WD-40 has raised dividends for 9 consecutive years and maintained dividend payments for 32 consecutive years.
indicating a commitment to shareholder returns. This is in line with the company’s strong financial position, as evidenced by its ability to cover interest payments with cash flows and maintain a moderate level of debt.
The company’s P/E ratio of 51.82 and the P/E ratio of 8.43 indicate that the WD-40 is trading at a relatively high earnings multiple compared to its near-term earnings growth. This assessment can be justified by market confidence in the company’s growth strategy, as described in the article.
For investors seeking a more comprehensive analysis, Investing Pro offers 14 additional WD-40 advice.
providing a deeper understanding of the company’s financial health and market position.
