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Today's Exclusive News WD-40 Stock Sank After Earnings—Here Are 5 Reasons Bulls Aren't WorriedAuthored by Thomas Hughes. Date Posted: 1/12/2026. 
Key Takeaways - WD-40 is trading near long-term lows, setting for a rebound that can deliver a high-double-digit total return within years.
- Q1 softness is tied to distributor order timing, not end-market weakness, and long-term forecasts were reaffirmed.
- Capital returns underpin the outlook, including the dividend and share buybacks.
WD-40's (NASDAQ: WDFC) fiscal Q1 2026 earnings report triggered a market sell-off. The drop, however, opened a buying opportunity that total-return investors often seek. Warren Buffett is sitting on $344 billion, the biggest cash position of his career. Meanwhile, CEOs behind America's most powerful tech companies are selling billions in shares even as Wall Street tells everyday investors to buy the AI dip. After 46 years tracking institutional money flows, one pattern stands out: money is leaving crowded AI trades and flooding into an ignored corner of the market. The reason is power. A single AI data center uses as much electricity as a small city, and the grid can't handle what's coming. Institutions are quietly loading up on companies upgrading America's power backbone. See the stocks flagged to lead the next leg of this market. Although the stock is well below its highs, it continues to trade in line with long-term trends, suggesting meaningful upside potential and a healthy dividend. Despite Q1 results falling short of analyst expectations, WD-40's long-term setup remains intact — and five fundamentals explain why the sell-off may be a buying opportunity. 1. Revenue Growth Is Still Intact The Q1 report failed to spark a rally because growth missed expectations. At $154.4 million, revenue rose less than 1% year-over-year, aided by foreign-exchange translation. On an FX-neutral basis, revenue declined more than 2%, but underlying trends are more encouraging. Timing of distributor orders weighed on results, while direct-market sales increased a robust 8%, driven by strength in the Americas, EIMEA and the Specialty Products segment. Looking ahead, the company expects the indirect-market softness to normalize as the year progresses. 2. Gross Margin Expansion Signals Operating Leverage Timing-related softness appears to be the main driver of the disappointing top-line print, yet profitability improved. Gross margin widened by 140 basis points, positioning the company to benefit as revenue leverage returns. SG&A rose about 10%, driven in part by non-recurring charges that had little impact on cash flow. Free cash flow margin remained steady at 17.5%, allowing capital returns — dividends and share repurchases — to continue. 3. WD-40 Reaffirms Fiscal 2026 Guidance and Long-Term Outlook Despite weak Q1 results, the company reaffirmed full-year guidance and indicated expectations toward the high end of the range. For fiscal 2026, management forecasts revenue growth of 5% to 9%, operating income growth of 5% to 12%, and commensurate earnings growth. Longer-term, forecasts are more ambitious. Management estimates it has reached only about 25% saturation of its target market and believes the business can grow substantially over time. At first glance a 34x price multiple looks rich, but relative to the company's potential under deeper market penetration the stock could trade nearer to roughly 10x, implying significant value. 4. Dividend Growth and Buybacks Support Total Returns WD-40's capital-return program — dividends plus buybacks — is healthy and supports the stock's valuation and long-term trajectory. The dividend yields just over 2% with the stock near long-term lows, represents roughly 60% of projected earnings, and has been raised annually for 17 consecutive years. The most recent increase exceeded 8%, and future raises are expected to track earnings growth. The company repurchased more than $20 million of shares in fiscal 2025 and plans to accelerate buybacks in 2026. Q1 repurchases topped $7.5 million, modestly reducing the share count year-over-year. 5. Institutional Ownership Provides a Stock-Price Backstop Institutions — the driving force behind most stocks — favor this one. They own more than 90% of the shares and shifted back to buying in the second half of 2025 after selling earlier in the year. That rotation coincided with the market bottom, suggesting a support level is in place heading into 2026. The primary risk is a pullback toward the long-term moving average near $175, but deeper lows appear unlikely. The most likely outcome is that the stock will remain near early-January levels before regaining traction later this year as fundamentals reassert themselves. 
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