On Friday, Jefferies maintained a Hold rating on WD-40 (NASDAQ:WDFC) stock while raising the price target to $280 from $250. The adjustment follows WD-40's recent earnings report, where the company posted a fourth-quarter earnings per share (EPS) of $1.23, which fell short of the consensus estimate by $0.11 and the firm's estimate by $0.13.
Despite the earnings miss, the firm's analyst remains optimistic about the company's future growth. The analyst pointed to WD-40's projection for 2025 EPS to range between $5.20 and $5.45, which, although below the consensus estimate of $5.69, does not take into account the expected divestiture of the home care businesses in 2025.
The report indicates that the fundamental strategy for WD-40 remains solid, with anticipated sales growth driven by market share gains and the introduction of new products. Furthermore, the analyst expects that the company will achieve margin expansion over the next two years due to controlled costs, productivity improvements, and an enhanced product mix.
WD-40's financial performance and future projections are crucial for investors tracking the company's stock. The revised price target from Jefferies reflects an assessment of WD-40's potential in light of recent earnings and strategic initiatives. The Hold rating suggests that the firm advises investors to maintain their positions in the stock at the current level of performance and market conditions.
In other recent news, WD-40 Company (NASDAQ:WDFC)'s fourth-quarter revenue outpaced analyst expectations, while earnings did not meet forecasts. The company reported a revenue of $156 million for the quarter, marking an 11% year-on-year increase and surpassing the consensus estimate of $149.2 million. However, the adjusted earnings per share came in at $1.23, falling short of the $1.34 analyst forecast.
Looking ahead, WD-40 anticipates revenue between $600 million and $630 million for fiscal 2025, a figure that exceeds the Wall Street projection of $583.4 million. The company's earnings per share are expected to range from $5.20 to $5.45, in line with the $5.22 consensus.
In the recent quarter, the company's gross margin improved to 54.1% from 51.4% a year ago, attributed to a favorable sales mix, decreased input costs, and increased operational efficiencies. The company is also making strides in divesting its Americas and United Kingdom homecare and cleaning product portfolios, with the transaction expected to be finalized in the first half of fiscal 2025. These are some of the recent developments within the WD-40 Company.
InvestingPro Insights
To complement Jefferies' analysis, InvestingPro data offers additional context on WD-40's financial position. The company's revenue growth of 9.07% over the last twelve months aligns with the analyst's expectation of continued sales growth. Moreover, WD-40's operating income margin of 16.61% suggests the company is maintaining profitability as it pursues expansion.
InvestingPro Tips highlight that WD-40 has raised its dividend for 9 consecutive years and has maintained dividend payments for 32 consecutive years, indicating a strong commitment to shareholder returns. This could be particularly appealing to income-focused investors, especially given the current dividend yield of 1.33%.
However, it's worth noting that WD-40 is trading at a high P/E ratio of 51.96, which is significantly above the market average. This high valuation multiple suggests that investors have high growth expectations for the company, aligning with the analyst's optimistic outlook on future growth and margin expansion.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide further insights into WD-40's financial health and market position.
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