WD-40 Stock Drops 6% After Earnings: What Happened?

WD-40 Company, the renowned manufacturer of the iconic multi-purpose lubricant, reported its first quarter 2025 financial results on January 10, 2025. Despite reporting net sales growth of 9% compared to the prior year fiscal quarter, the company's stock price dropped by 6% following the earnings release. This article explores the factors contributing to the stock's decline and analyzes the company's financial performance.



WD-40 Company's stock price has been volatile in recent months, with a 15% increase in July 2024 followed by a significant drop in January 2025. The stock's performance can be attributed to various factors, including earnings performance, dividend increases, and strategic initiatives.



The company's first quarter 2025 earnings report revealed a 9% increase in net sales, driven by a 10% increase in maintenance product sales. Gross margin improved by 70 basis points sequentially and 100 basis points year-over-year, reaching 54.8%. Net income increased by 8% compared to the prior year fiscal quarter, and diluted earnings per share (EPS) grew by 9% to $1.39.

Despite these positive financial results, the company's stock price dropped by 6% following the earnings release. Several factors contributed to this decline:

1. Increased competition: The company faced increased competition in its core markets, which likely impacted its sales and profitability.
2. Decline in harvest segment sales: There was a 3% drop in sales from the harvest segment, which contributed to the overall decline in revenue.
3. Concerns about future growth potential: Investors may have been concerned about the company's ability to maintain growth without the harvest segment, leading to a decrease in stock price.
4. Analyst sentiment: While analysts maintained a "Buy" rating, there were other stocks viewed as better investment opportunities, which may have influenced investor sentiment.
5. Earnings miss: Although the company reported a revenue increase of 6.8% year-over-year, the earnings per share (EPS) of $1.07 missed analysts' expectations of $1.27. This earnings miss may have contributed to the stock's decline.



In conclusion, WD-40 Company's stock price dropped by 6% after the first quarter 2025 earnings release due to a combination of increased competition, a decline in harvest segment sales, concerns about future growth potential, analyst sentiment, and an earnings miss. Despite the stock's recent decline, the company's financial performance remains strong, with net sales and gross margin improvements. Investors should closely monitor the company's strategic initiatives and financial results to make informed decisions about their investments.