WD

WD-40 Co

WDFC
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WD-40 Co AI Insights

Informational only. Not investment advice.
As of 2025-12-12

Snapshot

  • ROIC of 26% TTM vs industry median of -32% - exceptional capital efficiency from iconic brand with minimal reinvestment needs (capex only 4.5M TTM)[Return on Invested Capital]
  • Asset turnover 1.34x TTM vs industry median 0.19x - 7x efficiency advantage reflects asset-light model with 620M revenue on 476M assets[Asset Turnover]
  • FCF conversion 92% of net income (83.4M FCF vs 91M net income TTM) with 55% payout ratio funds 3.70/share dividend[Free Cash Flow]

Watch Triggers

  • Gross Margin: Falls below 52% for 2 consecutive quarters — Signals pricing power erosion or raw material cost pressure overwhelming brand premium
  • Operating Margin: Drops below 14% TTM — Would indicate SG&A inflation outpacing revenue growth, compressing returns
  • Free Cash Flow: FCF conversion falls below 80% of net income — Working capital build or capex increase would challenge dividend sustainability

Bull Case

Iconic brand moat: 26% ROIC and 1.34x asset turnover reflect pricing power that competitors cannot replicate. Near-zero capex needs (0.7% of revenue) convert almost all earnings to cash.

Return on Invested CapitalAsset TurnoverCapital Expenditure

Shareholder-friendly capital allocation: 62% 5-year payout ratio with 3.70/share dividend and 2.6M buybacks TTM, supported by 0.36 debt/equity and 83M FCF.

Dividend Payout RatioFree Cash FlowDebt to Equity

Bear Case

Premium valuation: P/E 30.5x vs industry median 20.2x and P/B 16.4x prices in perfection. EV/EBITDA of 24.8x leaves no margin of safety for execution missteps.

P/E RatioP/B RatioEnterprise Value

Limited growth runway: 620M TTM revenue in mature category with single-product concentration. Goodwill 36% of equity (97M) from acquisitions that haven't scaled.

Total RevenueGoodwillCommon Stockholders Equity

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
55%

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Forward Thesis

Pricing power and operating leverage should expand margins as raw material costs normalize

1-3ymed
  • Gross margin 55% TTM at industry median despite inflation
  • Operating margin 16.7% with room to expand
  • Minimal capex (0.7% of revenue) preserves FCF
Operating income 104M on 620M revenue TTMCapex only 4.5M TTM vs 83M FCFDebt/equity 0.36 provides flexibility
Valuation Context
Caveats

Public Strategies Rankings

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Fundamental company data provided by Morningstar, updated daily.

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