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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

WD-40 Earnings Pinpoint Economic Insights That Matter

NEW YORK (TheStreet) -- It is difficult not to like the company, WD-40  (WDFC). 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 ChartWDFC 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.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,039.49 +60.36 0.36%
S&P 500 1,992.37 +5.86 0.30%
NASDAQ 4,532.1040 +5.6220 0.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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