For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on WD-40 Company (NASDAQ:WDFC) useful as an attempt to give more color around how WD-40 is currently performing.
Could WDFC beat the long-term trend and outperform its industry?
WDFC’s trailing twelve-month earnings (from 31 August 2018) of US$65m has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.6%, indicating the rate at which WDFC is growing has accelerated. How has it been able to do this? Let’s see if it is merely attributable to an industry uplift, or if WD-40 has experienced some company-specific growth.
In terms of returns from investment, WD-40 has invested its equity funds well leading to a 42% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the US Household Products industry of 8.4%, indicating WD-40 has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for WD-40’s debt level, has increased over the past 3 years from 22% to 33%.
What does this mean?
WD-40’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While WD-40 has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research WD-40 to get a more holistic view of the stock by looking 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.
- Financial Health: Are WDFC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 August 2018. This may not be consistent with full year annual report figures.
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 firstname.lastname@example.org.