Why WD-40 (WDFC) Shares Are Getting Obliterated Today

Jabin Bastian /
2024/04/10 12:24 pm EDT

What Happened:

Shares of household products company WD-40 (NASDAQGS:WDFC) fell 5.7% in the afternoon session after the company reported first-quarter results, with revenue and operating margin falling below analysts' expectations. Furthermore, even though it raised its full-year EPS guidance, that forecast missed analysts' estimates as well. On the other hand, WD-40's full-year revenue forecast beat analysts' expectations. During the quarter, the company announced the acquisition of a Brazilian marketing distributor. It also announced its intentions to divest its U.S. and U.K. Homecare and Cleaning Products segments. WD-40's goal with these strategic moves is to focus on its core, higher-margin maintenance products. Zooming out, this was still a decent, albeit mixed, quarter.

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What is the market telling us:

WD-40's shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock gained 6.7% on the news that the company reported first quarter results that exceeded analysts' revenue expectations. Its operating margin also outperformed Wall Street's estimates. Management provided encouraging comments and added that improved trends observed in the second half of fiscal year '23 have carried into fiscal year '24. The CEO said, "This is the first time since fiscal year 2021 that our business has been firing on all cylinders." Therefore, it is not surprising that it reiterated its previous outlook for fiscal 2024, showing that WD-40 is staying on track. Zooming out, we think this was a solid quarter that should please shareholders.

WD-40 is down 0.6% since the beginning of the year, and at $239.96 per share it is trading 13% below its 52-week high of $275.82 from January 2024. Investors who bought $1,000 worth of WD-40's shares 5 years ago would now be looking at an investment worth $1,467.

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