No Rust On WD-40 As Q4 Results Beat Estimates

Wunderlich has raised the price target on WD-40 Company WDFC shares to $115 after the company’s fourth-quarter earnings handily beat both the brokerage’s as well as the consensus estimate.

WD-40 reported fourth-quarter EPS of $0.99, topping Wunderlich’s $0.79 and consensus estimate of $0.82. Revenue increased 5.7 percent and gross margin rose 310 basis points to 57.4 percent on lower input costs.

Analyst Liam Burke noted that the company’s geographic diversity, and defensible business model helped it to offset currency and economic headwinds. The company’s shares could see multiple expansion through consistent long-term growth in revenue and EBITDA margins.

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However, Burke maintains a Hold rating on the stock on full valuation and is waiting for a better entry point.

“With WDFC shares currently trading at about 29.5x our 2017 EPS estimate, we believe there may be a better time to buy WDFC shares. Our rating on WDFC shares remains Hold,” Burke wrote in a note.

Burke’s target of $115 is based on his 31.2x 2017 EPS estimate of $3.69. The analyst said WDFC shares have traded in a wide-range PE of about 16.0x to 34.0x over the last five years.

At the time of writing, shares of WD-40 had risen 2.46 percent on the day to trade at $109.04.

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