WD-40 (WDFC) Profit Margin Jumps to 14.7%, Surpassing Prior Year and Bullish Expectations

WD-40 (WDFC) reported a net profit margin of 14.7%, up from 11.8% the previous year, with earnings increasing 31.1% over the last twelve months. This growth is significantly higher than its five-year average growth rate of 3.6% per year. Shares are trading at $202.43, well above the estimated fair value of $32.29, and the company’s price-to-earnings ratio of 30.1x is well above peer and industry averages. With high profitability quality, an attractive dividend, and a steady growth track record, WD-40 continues to draw attention, especially in the absence of any reported material risks.

See our full analysis for WD-40.

Next, we will compare these headline numbers with prevailing market narratives to see where the consensus is robust and where it could be challenged.

See what the community is saying about WD-40

Analyst Price Target Outpaces $202 Share Price

• WD-40's analyst price target stands at $277.50, which is 37% higher than the current share price of $202.43 and 8.6 times greater than the DCF fair value of $32.29. This highlights a remarkable disconnect between market optimism and discounted cash flow models.
• Consensus narrative points to bullish expectations for revenue to reach $721.1 million and earnings to settle at $83.6 million by 2028, yet
  • these forecasts imply that for the $277.50 price target to hold, the future PE would need to rise dramatically to 52.5x, far above both the current PE of 30.1x and the industry average of 21.6x,
  • which presents a striking contrast as analysts expect underlying earnings to decline from $86.3 million today to $83.6 million in 2028, even as valuation multiples expand.
• Curious how analysts justify this stretch? See how they frame the story and test your own assumptions in the full consensus narrative. 📊 Read the full WD-40 Consensus Narrative.

Future Margins Expected to Compress

• Analysts project net profit margins to contract from 14.1% today to 11.6% within three years, despite strategies targeting margin expansion through premiumization and divesting of lower-profit brands.
• This consensus view highlights:
  • that premiumization efforts and direct market strategies in key regions like EIMEA are intended to offset anticipated margin pressure,
  • but margin compression projections suggest analysts remain cautious about the company’s ability to fully capture these operational benefits amid rising costs and regional challenges.

Revenue Growth Lags Broader Market Expectations

• WD-40’s revenue is forecast to grow at just 5.8% annually over the coming years, trailing anticipated rates for the overall US market and indicating limited topline acceleration versus broader benchmarks.
• Consensus narrative underscores:
  • that significant volume growth in Europe, India, the Middle East, and Africa combined with a shift to direct markets is intended to sustain topline expansion,
  • but potential headwinds from regional declines (like Asia-Pacific’s 1% sales drop) and foreign currency fluctuations temper expectations for above-market revenue gains.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for WD-40 on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Have a different take on the data? Shape your own view and share your narrative in just a few minutes. Do it your way

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

See What Else Is Out There

WD-40 faces valuation challenges, with its share price and analyst targets significantly above fair value even though there are forecasts for weaker earnings and compressing margins.

Searching for stocks with more attractive entry points? Discover opportunities trading below intrinsic value using our these 871 undervalued stocks based on cash flows and see which companies offer greater upside with less risk.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com