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Understanding how WD-40 Company (NASDAQ:WDFC) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how WD-40 is doing by comparing its latest earnings with its long-term trend as well as the performance of its household products industry peers.
How WDFC fared against its long-term earnings performance and its industry
WDFC's trailing twelve-month earnings (from 28 February 2019) of US$67m has jumped 19% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.7%, indicating the rate at which WDFC is growing has accelerated. What's the driver of this growth? Let's see whether it is merely a result of industry tailwinds, or if WD-40 has seen some company-specific growth.
In terms of returns from investment, WD-40 has invested its equity funds well leading to a 43% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 23% exceeds the US Household Products industry of 8.6%, 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 23% to 33%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as WD-40 gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. 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 28 February 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.