WD-40 Company Gears Up for a Double-Digit Stock Advance

Company Performance - WD-40 Company reported Q4 revenue of $156 million, an 11% increase YoY, surpassing consensus estimates by 450 basis points [1] - Sales in the Americas grew by 6%, APAC by 21%, and emerging markets by 16%, reflecting strong global performance [1] - Maintenance Products segment grew by 12%, driven by a 13% increase in WD-40 Multi-Use product sales, while Harvest Brands declined by 2% [1] - Gross margin widened by 270 basis points due to revenue leverage and product mix, though net income only increased by 1% to $16.8 million [2] - The company expects revenue growth of 6%-11% in 2025, with earnings growth projected at 9%-14% [2] Financial Health and Strategy - WD-40 Company maintains a robust balance sheet with $46.7 million in cash and low leverage, with total liabilities at less than 0.5x assets and 1x equity [3] - Equity, a measure of shareholder value, increased by nearly 10% [3] - The company plans to divest its Harvest Brand Cleaning Products segment to focus on core business growth, despite its good margins [2] - Cash flow was negative due to growth investments, but cash burn was only 3% of total cash, indicating strong capitalization [3] Dividend and Capital Returns - WD-40 Company has a reliable dividend with a yield of 1.33%, aligning with the S&P 500 average [1][3] - The company has a 16-year track record of dividend increases, with an annualized 3-year dividend growth rate of 7.40% [3] - The payout ratio is high at 68.88%, but it is supported by strong cash flow and growth prospects [3] Market and Analyst Sentiment - Analysts from DA Davidson and Jefferies Financial Group rate WD-40 stock as "Moderate Buy," with price targets ranging from $280 to $322, indicating a potential upside of 7.75%-20% [4] - Technical indicators suggest the stock is near equilibrium, with a bias towards upward movement due to growth, cash flow, and capital return prospects [5] Growth Opportunities - With 51% of revenue coming from the U.S., which represents only 15% of the global economy, WD-40 has significant growth potential in international markets [1] - Management is actively investing in new opportunities to drive future growth [1]