Some stocks seem to have a set of valuation characteristics of their very own, and WD-40 (NASDAQ:WDFC) is definitely one of them.
Like other companies with exposure to the home improvement sector, WD-40 had a very strong August-ended quarter. In nutshell, global stay-at-home measures have encouraged a shift in spending toward DIY and spending on the home. However, WD-40’s valuation looks more up than events would justify and investors need to carefully consider buying into the stock at this level.
Before getting into the details of the company’s operations, let’s pause for a moment and consider the hefty valuations that WD-40 now trades at. Whether it’s enterprise value (market cap plus net debt) to earnings before interest, taxation, depreciation, and amortization (EBITDA); price to free cash flow, or price to earnings, WD-40’s valuation is expensive.
Three reasons to be cautious on WD-40