WD-40: As Fluid as ever

Published: 2026-04-14 08:46:31 ET WDFC

Two years ago, we noted in these columns that, despite its undeniable qualities, the famous rust-prevention specialist perhaps did not warrant a market capitalization equivalent to 50x its earnings.

Kevin Smith

Published on 04/14/2026 at 08:46 am EDT

WD-40 has expanded its operations at a modest but steady pace. In a low-interest-rate environment, this has earned the company a spectacular expansion in multiples, with its valuation rising from an average of 20x earnings to levels between 30x and 40x, including several peaks hitting a ceiling of even 50x earnings.

To its credit, the San Diego-based group has navigated the heavy inflationary pressures affecting the broader consumer staples sector remarkably well. It continues to deliver organic sales growth - a notable rarity in this industry - and maintains strong profitability, despite the significant margin compression observed in recent quarters.

It is striking that WD-40, managed with great conservatism, has succumbed to none of the sector's common pitfalls: no M&A, and no frantic debt-funded share buybacks. The market has always appreciated this sensible positioning, perhaps excessively at times, but consistently so.

True to form, WD-40 delivered record operating profit in 2025 and returned $65m to shareholders, comprising $50m in dividends and $15m in share repurchases. Furthermore, its H1 results for the current fiscal year, released last week, are very positive, with sales up 6% y-o-y.

Admittedly, rising operating expenses have almost entirely offset these gains. However, there is no cause for alarm: this is a classic pattern for WD-40, which traditionally generates the bulk of its margins in H2, following heavier promotional activity and advertising investment in H1.