Tuesday, December 8, 2015

WD-40, Risk To Street Estimates And Stock Price Near Term $WDFC, #earnings, #in

*Risk to earnings over the next two quarters according to our calculations
*We do think positive drivers start to kick in two quarters from now
*Dependency on foreign markets for growth is a strength and a risk
*Great Fundamental Story Longer Term
We are impressed with WD-40s (NASDAQ:WDFC) growth strategy and think that they will carry it out successfully. We worry about the valuation in conjunction with the next couple of quarters where we think there is earnings risk versus the street estimates. Our numbers show more growth in their fiscal back half while the street numbers show it more even throughout the year.
The company likely reports early January.

Near term risks to watch

*Currency continues to be a material drag. Half of their business is international and a large percent is in emerging markets.
*They are managing an important roll out of two core products that should support topline but may cause a near term drag in operating performance.
*Comparisons ease materially two quarters out but the February quarter has difficult hurdles.

6-9 Months Out Important Positive Drivers To Numbers

We always look for a company that is driving their business through core product initiatives rather than fringe product growth. WDFC is doing that right now. They have teamed up ....


Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. 

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