Analysts might have been a bit too bullish on WD-40 Company (NASDAQ:WDFC), given that the company fell short of expectations when it released its quarterly results last week. It wasn’t a great result overall – while revenue fell marginally short of analyst estimates at US$99m, statutory earnings missed forecasts by 11%, coming in at just US$0.88 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we’ve gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for WD-40 from two analysts is for revenues of US$441.4m in 2020, which is a reasonable 4.9% increase on its sales over the past 12 months. Statutory earnings per share are expected to surge 20% to US$4.77. In the lead-up to this report, analysts had been modelling revenues of US$444.1m and earnings per share (EPS) of US$4.79 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$187, suggesting that the company has met expectations in its recent result.
Further, we can compare these estimates to past performance, and see how WD-40 forecasts compare to the wider market’s forecast performance. Analysts are definitely expecting WD-40’s growth to accelerate, with the forecast 4.9% growth ranking favourably alongside historical growth of 2.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect WD-40 to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – and our data does suggest that WD-40’s revenues are expected to grow faster than the wider market. The consensus price target held steady at US$187, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
With that in mind, we wouldn’t be too quick to come to a conclusion on WD-40. Long-term earnings power is much more important than next year’s profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
It might also be worth considering whether WD-40’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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