This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

WD-40 Earnings Pinpoint Economic Insights That Matter

Stocks in this article: WDFC

NEW YORK (TheStreet) -- It is difficult not to like the company, WD-40  (WDFC - Get Report). Not only does almost everyone have a can of the eponymous household lubricant but the company's disclosures and presentation document are a joy to read. They are, in my view, insightful, informative and to the point.

For a company with a market cap of not much over $1 billion, many mega caps could learn a lot from looking at the style and structure of its reporting. The company's deceptively simple target of generating a 50% gross margin of net sales, holding the cost of doing business to 30% of net sales and hence generating a 20% EBITDA margin (of net sales) provides great accountability for investors. WDFC Chart WDFC data by YCharts

Corporate results announced after the market close Tuesday showed some progress with its year-to-date 2014 sales, up 5% over the same period in 2013, and earnings per share up 6%. Hopes for 2014 were of a similar magnitude, but this was not enough for the market, which marked the shares down more than 6% on Wednesday.

WD-40 is not in crisis. With a strong balance sheet, geographic brand expansion and an experienced management team, it remains in a position of corporate strength.

The WD-40 quarterly presentation also contained great insight for economy watchers. Under a slide titled "Conditions that impact our outlook," the company graded key factors that influenced its business, with a traffic-light grading system: Green for favorable, yellow for uncertain and red for unfavorable. And the results? Two greens and three yellows.

The favorable greens were given for internal initiatives, such as maintaining gross margin above 50% and keeping input costs under control. The uncertain yellows, by contrast, dealt broadly with the wider world, such as the economic backdrop and foreign-exchange rates.

That is the reality in April 2014, for even tightly run companies with strong eponymous brands: It is an uncertain world out there. Valuing companies with such a backdrop is never easy.

Welcome to the first-quarter 2014 results season.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs