WD-40 pany-Why WD-40 Stock Dropped 6% After Earnings

Core Viewpoint - WD-40's stock declined 6.3% despite beating Q1 earnings forecasts, indicating investor concerns about future guidance rather than current performance [1][3]. Financial Performance - WD-40 reported Q1 earnings of $1.39 per share, exceeding analyst expectations of$ 1.26 per share [1]. - Sales for the quarter reached $153.5 million, representing a 9% increase compared to the same quarter last year [1]. - The gross profit margin improved by 1 percentage point to 54.8% [1]. Expense Analysis - Selling, general, and administrative expenses increased by 14%, outpacing sales growth [2]. - Advertising and sales promotions expenses rose by 20%, which balanced out the gross margin improvements [2]. - Consequently, earnings per share grew by 9%, aligning closely with sales growth [2]. Future Guidance - For fiscal 2025, WD-40 forecasts sales growth between 6% and 11%, suggesting slower growth compared to Q1 [4]. - The projected gross profit margin is expected to be between 54% and 55%, indicating a slight decline from Q1's 54.8% [4]. - Management anticipates earnings per share for the year to be between$ 5.20 and $5.45, which is below Wall Street's expectation of$ 5.36 [5]. Valuation Concerns - The anticipated 2% annual earnings growth raises questions about the justification of WD-40's current stock price, which is at 46 times trailing earnings [5].