Right now, WD-40 Inc. WDFC share price is at $242.87, after a 0.29% drop. Over the past month, the stock spiked by 3.13%, but over the past year, it actually fell by 8.44%. With questionable short-term performance like this, and great long-term performance, long-term shareholders might want to start looking into the company's price-to-earnings ratio.
The stock is currently higher its 52 week low by 17.27%. Assuming that all other factors are held constant, this could present itself as an opportunity for investors trying to diversify their portfolio with Household Products stocks, and capitalize on the lower share price observed over the year.
The P/E ratio is used by long-term shareholders to assess the company's market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E can either represent a company's poor future earnings potential or a buying opportunity relative to other stocks. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.
Depending on the particular phase of a business cycle, some industries will perform better than others.
Compared to the aggregate P/E ratio of 47.37 in the Household Products industry, WD-40 Inc. has a higher P/E ratio of 47.85. Shareholders might be inclined to think that WD-40 Inc. might perform better than its industry group. It's also possible that the stock is overvalued.
Price to earnings ratio is not always a great indicator of the company's performance. Depending on the earnings makeup of a company, investors can become unable to attain key insights from trailing earnings.
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