WDFC
WD-40 ($WDFC) Insiders' 'Contrarian Buying' - Opportunity in 30% Stock Drop Despite 31% EPS Surge
10/27/2025 21:30
Sentiment
Summary
- WD-40 ($WDFC) insiders are making aggressive purchases during stock decline, with CFO buying $57,000 worth in April and director purchasing $200,000 worth in October.
- Fiscal 2025 EPS surged 31% and Asia-Pacific sales grew 28%, yet stock dropped 30% from peak, creating excessive discount versus fundamentals.
- P/E ratio compressed from 54x to 30.8x, improving valuation attractiveness with analyst targets suggesting 30% upside potential from current levels.
POSITIVE
- Strong insider confidence demonstrated through consecutive purchases by CFO and directors
- Fiscal 2025 EPS surge of 31% and Asia-Pacific region's robust 28% growth achievement
- Operational efficiency with 55.1% gross margin improvement, achieving 55% target one year ahead
- Valuation compression to 30.8x P/E creates 30% upside potential versus analyst targets
- Stable cash flow ($87.92 million) and healthy financial structure (35.58% debt-to-equity)
NEGATIVE
- Americas region sales declined 2%, constraining overall growth as a mature market
- Ongoing raw material cost pressures may burden future margin improvement efforts
- Intensifying competition from private label brands raises market share concerns
- Stock down 30% from peak reflects persistent negative market sentiment
Expert
From a specialty chemicals perspective, WD-40's insider purchases are highly positive signals. CFO purchases in strong brand-power B2C specialty chemical companies indicate strong confidence in cost management and profitability outlook, while 28% Asia-Pacific growth demonstrates successful global expansion strategy.
Previous Closing Price
$193.29
-8.89(4.39%)
Average Insider Trading Data Over the Past Year
$202.93
Purchase Average Price
$289.7
Sale Average Price
$380.09K
Purchase Amount
$289.7K
Sale Amount
Transaction related to News
Trading Date | Filing Date | Insider | Title | Type | Avg Price | Trans Value |
|---|---|---|---|---|---|---|
10/30/2025 | 10/30/2025 | Sale | $ |
An intriguing paradox surrounding WD-40 Company ($WDFC) is capturing investor attention, as company insiders are making aggressive purchases during a period of declining stock prices despite the world-famous rust prevention and lubricant brand's strong fundamentals. WD-40 is a specialty chemicals company founded in 1953, globally recognized for its namesake multi-purpose spray. Headquartered in San Diego, the company maintains a diversified portfolio including WD-40 Multi-Use Product, 3-IN-ONE oils, GT85 lubricants, and household cleaning products such as 2000 Flushes and Spot Shot. With distribution through hardware stores, automotive parts outlets, industrial distributors, mass retailers, online platforms, and various specialty channels worldwide, the company has established a stable revenue foundation. The key insight for investors lies in the stark disconnect between the company's fundamentals and stock price movement. Fiscal 2025 revenue reached $620 million, up 5% year-over-year, while earnings per share (EPS) surged 31% to $6.69. The October Q4 earnings particularly impressed with EPS of $1.56, beating consensus estimates of $1.26 by 24%. However, despite these strong results, the stock trades in the low $200s, down approximately 30% from its November 2024 peak of $286. In this context, insider trading patterns carry significant implications. The most notable move comes from CFO Sara Kathleen Hyzer, who purchased 256 shares at $222.83 per share in April, investing a total of $57,044. CFO purchases typically signal strong confidence in the company's financial position and future prospects. The timing of this purchase, during a period of substantial stock decline from earlier levels, makes it particularly meaningful. Additionally, Director Daniel Carter's purchase of 1,000 shares at $199.37 per share on October 27, totaling approximately $200,000, demonstrates insider belief in significant upside potential from current price levels. Meanwhile, Director William B. Noble's sales of 1,800 shares in October-November 2024 were primarily related to tax obligations and vested equity compensation rather than investment decisions. Regional performance data supports insider optimism. Fiscal 2025 saw Asia-Pacific sales surge 28%, while EIMEA (Europe, India, Middle East, Africa) grew 7%. Though Americas declined 2%, this reflects mature market characteristics within expected parameters. Asia-Pacific's robust growth particularly highlights WD-40's global expansion potential. Financial health metrics remain solid. Gross margin improved from 53.4% to 55.1% year-over-year, while return on equity (ROE) reached 36.49%. The company holds $58.13 million in cash with a manageable debt-to-equity ratio of 35.58%. Operating cash flow of $87.92 million annually provides ample support for dividends and share repurchases. Management expresses strong confidence in fiscal 2026, projecting revenue of $630-655 million (5-9% growth) and gross margin improvement to 55.5-56.5%. This reflects confidence from achieving the 55% gross margin target a year ahead of schedule. From a valuation perspective, WD-40 presents compelling value. The P/E ratio compressed to 30.8x from 54x in August 2024. Analyst consensus targets average $264, suggesting approximately 30% upside potential, with some targets reaching $300-322, aligning with insider purchase decisions. Risks include ongoing raw material cost pressures and potential growth constraints from mature Americas market performance. Private label competition could also pressure margins. However, positive factors carry more weight: brand power, global distribution network, stable cash flows, and most importantly, confident insider purchases. The stock's low beta of 0.08 provides defensive characteristics valuable in volatile market conditions. Ultimately, WD-40 represents a classic value situation where strong fundamentals contrast with excessive stock price discounting. Insider purchases signal strong conviction that this gap will close. Investors should monitor whether Asia-Pacific growth momentum continues and gross margin improvements persist in upcoming quarters.