As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of WD-40 Company (NASDAQ:WDFC), it is a company with great financial health as well as a a great track record of performance. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on WD-40 here.
Outstanding track record with adequate balance sheet
WDFC delivered a bottom-line expansion of 23% in the prior year, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 42%, which is what investors like to see! WDFC’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. WDFC’s has produced operating cash levels of 0.75x total debt over the past year, which implies that WDFC’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
Next Steps:
For WD-40, I’ve put together three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for WDFC’s future growth? Take a look at our free research report of analyst consensus for WDFC’s outlook.
- Valuation: What is WDFC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WDFC is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of WDFC? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.