WD-40 Company (NASDAQ:WDFC) investors will be delighted, with the company turning in some strong numbers with its latest results. WD-40 delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$125m, some 17% above indicated. Statutory EPS were US$1.72, an impressive 67% ahead of forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on WD-40 after the latest results.
See our latest analysis for WD-40
Following the latest results, WD-40's two analysts are now forecasting revenues of US$460.6m in 2021. This would be a satisfactory 6.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 5.0% to US$5.51. In the lead-up to this report, the analysts had been modelling revenues of US$426.3m and earnings per share (EPS) of US$4.86 in 2021. So it seems there's been a definite increase in optimism about WD-40's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 37% to US$302per share.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that WD-40's rate of growth is expected to accelerate meaningfully, with the forecast 6.0% revenue growth noticeably faster than its historical growth of 2.9%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect WD-40 to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around WD-40's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.