WD-40 Company's stock traded near long-term lows following its fiscal first-quarter 2026 earnings report, which fell short of analyst expectations. The sell-off has opened what some investors view as a buying opportunity for potential high-double-digit total returns in coming years.
Revenue reached $154.4 million, growing less than 1% year-over-year, entirely due to foreign exchange conversion. On an FX-neutral basis, revenue declined by more than 2%. Company officials attributed the softness to timing of distributor-related orders rather than end-market weakness.
Direct market sales increased by 8%, driven by growth in the Americas and EIMEA regions along with the Specialty products segment. The company expects indirect-market softness to normalize as the fiscal year progresses.
Despite the revenue shortfall, gross margin expanded by 140 basis points. The free cash flow margin remained at 17.5%, supporting continued capital returns including dividends and share repurchases.
WD-40 reaffirmed its full-year fiscal 2026 guidance, projecting revenue growth of 5% to 9% and operating income growth of 5% to 12%. The company stated it has reached only 25% saturation of its target market and could potentially quadruple in size over time.
The dividend yields slightly more than 2% with the stock near long-term lows. The payout represents approximately 60% of earnings forecasts and has been increased annually for 17 consecutive years, with the latest increase exceeding 8%.
Share repurchases totaled $7.5 million in the first quarter, following more than $20 million in buybacks during fiscal 2025. The company plans to accelerate buyback activity in 2026.
Institutional investors own more than 90% of WD-40 shares and resumed buying in the second half of 2025 after selling earlier in the year. Their purchasing activity aligned with what appears to be a market bottom.