WD-40's Negative Free Cash Flow Keeps This Analyst Bearish On The Stock

BWS Financial analyst Hamed Khorsand reiterated a Sell rating on the shares of WD-40 Company WDFC with a price target of $88.
The company reported Q4 results missing the guidance due to slower roll out of price increases and continued inflationary pressures on input costs.
The analyst said WD-40’s sales benefited from certain customers pulling forward orders in anticipation of announced price increases in fiscal fourth quarter and fiscal first quarter.
The miss underscores Khorsand’s continued concerns in the business where the company is depending on price increases to solve demand shortfall, with management affirming unit volumes declined in Q4 and unit volume could decrease in fiscal 2023.
The analyst cited the company has been raising prices to offset the increase in input costs related to petroleum-based specialty chemicals and aerosol cans.
He said there is no timeline for when it could experience cost relief. Khorsand added further price increases could receive push back from customers.
WD-40 generated negative free cash flow in fiscal 2022 and there is no assurance free cash flow turn positive in fiscal 2023.
Also Read: What's Going On With WD-40 Company Shares Falling Today
Price Action: WDFC shares are trading lower by 8.62% at $156.11 on the last check Thursday.

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