Nobody was watching WD-40 today. That’s exactly the problem.
While the market spent the session parsing SK Hynix’s debut and debating whether Costco’s deceleration means anything real, a 84-year-old brand headquartered in San Diego just posted one of the cleanest earnings beats of the entire quarter — and almost nobody noticed until the close.
Here’s what actually happened.
WD-40 Company (WDFC) delivered one of its strongest quarterly performances in recent years during its fiscal Q3 2026, reporting net sales of $195.1 million — 24% growth over the prior year — while adjusted diluted EPS surged 51% to $2.33. The results significantly exceeded Wall Street expectations, with EPS beating forecasts by $0.76 and revenue topping estimates by nearly $25 million.
Investors responded accordingly, driving shares up 14.26% in after-hours trading to $273.55 — well above the stock’s previous 52-week high of $253.24.
Let’s slow down on that EPS number for a second. A 48% beat versus consensus isn’t a rounding error. That’s a business doing something different than what analysts modeled.
What Actually Drove the Move
Net sales increased 24%, driven by double-digit growth across all three trade blocs. Operating income increased 47%, reflecting strong operating leverage and the benefits of scale.
That operating leverage line is the part worth sitting with. WD-40 delivered 24% net sales growth to $195.1 million and expanded gross margin to 56.6%. Operating income grew 47% to $40.3 million, with net income up 44% to $30.2 million. In other words: revenue grew faster than costs, and profits grew faster than revenue. That’s the compounding math that attracts long-term holders.
CEO Steve Brass attributed the performance to the company’s Must-Win Battles strategy, which focuses on geographic expansion and the promotion of premium products. Management noted double-digit year-to-date growth in geographic expansion, WD-40 Specialist, premiumized products, and e-commerce.
The Numbers
- Total net sales: $195.1 million, up 24% year-over-year
- EPS: $2.33 adjusted vs. $1.58 consensus estimate
- Earnings surprise: +47.47%
- Operating income: $40.3 million, up 47%
- Gross margin: 56.6%
- Updated FY2026 guidance: net sales of $675 to $690 million, non-GAAP EPS of $6.05 to $6.35
The company issued revenue guidance of $675.0 million to $690.0 million, compared to the prior consensus revenue estimate of $660.3 million. That’s not a small revision.
Then there’s the capital return piece. Updated fiscal 2026 guidance calls for reported net sales of $675 to $690 million and non-GAAP EPS of $6.05 to $6.35, alongside a new $100 million share repurchase authorization and continued dividends including a $1.02 per-share quarterly payout.
Why the Stock Was Actually Down Before the Print
The stock had closed the regular session at $239.42, down 2.91% for the day — pulled lower with the broader market. That’s the kind of setup where the earnings gap is especially jarring. Shares trading below fair value, the company beats dramatically, and after-hours buyers step in 14% above the close.
Slight tangent, but it’s relevant: WD-40 has a 52-week low of $175.38 and a prior high of $253.24. After tonight’s move, the stock is printing above that ceiling. That changes the technical conversation entirely.
What the Bears Will Say
Fair. Gross margin improved to 56.6% this quarter, but the company is adjusting its expectations to a range of 54.5% to 55.5% due to anticipated cost increases ahead. That’s a meaningful step down from what was just delivered.
Asia-Pacific gross margin declined from 59.0% to 56.5% year-over-year on petroleum-based input costs concentrated in Asia distributor markets affected by the Iran conflict — a segment-level data point the consolidated 56.6% gross margin headline masks.
So the forward margin picture is messier than the headline suggests. Anyone buying the after-hours gap needs to understand that the Q4 gross margin is almost certainly going to look softer. Management outlined five key actions to improve gross margin going forward: premiumization, geographic expansion, product mix enhancement, cost optimization, and tactical price increases — with Asia-Pacific and Europe price increases expected to materialize in late fiscal 2026 and into fiscal 2027. That’s a recovery thesis that requires time.
The Bigger Question
Here’s what I keep coming back to: WD-40’s products are currently available in more than 176 countries and territories worldwide. This isn’t a niche regional story. The brand is global, the penetration rate in most emerging markets is still low, and the unit economics get better at scale. The company has a return on equity of 30.23% and a net margin of 12.57%.
A 30% return on equity from a company selling a blue can of lubricant. That’s the actual business hiding underneath an AI-obsessed market that wasn’t watching.
In the past 12 months, WD-40 Company has seen insider activity with seven insider buys and no insider sells. That’s not a coincidence.
What to Watch Next
The fiscal Q4 report is expected around October 21, 2026. Analysts are projecting EPS of $1.65 for that period — which, given the guidance raise tonight, looks conservative. The real question is whether gross margin compression in Asia-Pacific and Europe stabilizes or continues to widen. If the price increases management implemented start flowing through the income statement, the Q4 print could be another upside surprise. If input costs keep climbing due to the Iran conflict and oil volatility, the margin story gets more complicated.
The $100 million buyback becomes active September 1. $7.0 million of the prior $50 million repurchase authorization remains unused heading into the new authorization — so there’s no meaningful near-term buyback support into Q4. That’s a detail worth tracking.
Tonight’s move is real. The question of whether it holds depends entirely on whether the margin compression story is temporary or structural. Management says temporary. The data from Asia-Pacific says the next quarter will be the test.
For informational purposes only.
