A Look at WD-40 (WDFC) Valuation After Its 8%+ Quarterly Dividend Increase

WD-40 (WDFC) just gave income-focused investors something to chew on, lifting its quarterly dividend to 1.02 dollars per share, more than an 8% bump that underscores management’s confidence and shareholder friendly posture.

See our latest analysis for WD-40.

The higher payout comes as WD-40’s share price has started to stabilize, with a 1 month share price return of 6.24% helping to offset a weaker year to date share price return and a negative 1 year total shareholder return, so near term momentum is tentatively rebuilding after a tougher stretch.

If this dividend move has you rethinking your income and quality mix, it could be worth exploring fast growing stocks with high insider ownership as a fresh source of ideas beyond the usual names.

With WD-40’s shares still down double digits year to date despite steady revenue growth and a healthy dividend hike, are investors being handed a quietly attractive entry point, or is the market already pricing in every turn of the wrench?

Most Popular Narrative Narrative: 21.5% Undervalued

With WD-40’s last close at $207.63 against a narrative fair value of $264.50, the story points to meaningful upside if its assumptions hold.

The company's focus on premiumization of products, with targets for a compound annual growth rate for premium products exceeding 10%, is poised to improve net margins by shifting the product mix towards higher-margin offerings.

WD-40’s strategy to divest its less profitable home care and cleaning brands is expected to position the company as a higher growth and higher gross margin enterprise, ultimately boosting operational margins and net margins once complete.

Read the complete narrative.

Want to see what kind of growth, margin mix shift, and future earnings multiple are being baked into that upside case? The full narrative reveals the playbook.

Result: Fair Value of $264.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering uncertainty around divesting home care brands and ongoing currency headwinds could pressure margins and undermine that optimistic upside narrative.

Find out about the key risks to this WD-40 narrative.

Another Lens on Valuation

Step away from the narrative fair value and WD-40 suddenly looks pricey. On a price to earnings basis of about 31 times, it trades well above the 17.3 times industry average, its 12.5 times peer average and even our 12.6 times fair ratio, raising real downside risk if sentiment cools.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own WD-40 Narrative

If you see the story differently or want to stress test the numbers yourself, you can quickly build a custom view in minutes: Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding WD-40.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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