Critical Contrast: WD-40 (WDFC) and Oil-Dri Corporation Of America (ODC)

WD-40 (NASDAQ: WDFC) and Oil-Dri Corporation Of America (NYSE:ODC) are both small-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Dividends

WD-40 pays an annual dividend of $1.96 per share and has a dividend yield of 1.8%. Oil-Dri Corporation Of America pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. WD-40 pays out 53.0% of its earnings in the form of a dividend. Oil-Dri Corporation Of America pays out 45.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oil-Dri Corporation Of America has raised its dividend for 14 consecutive years. Oil-Dri Corporation Of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares WD-40 and Oil-Dri Corporation Of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WD-40 13.85% 39.64% 15.29%
Oil-Dri Corporation Of America 5.63% 12.39% 7.15%

Institutional and Insider Ownership

80.6% of WD-40 shares are held by institutional investors. Comparatively, 54.0% of Oil-Dri Corporation Of America shares are held by institutional investors. 3.9% of WD-40 shares are held by insiders. Comparatively, 13.9% of Oil-Dri Corporation Of America shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk and Volatility

WD-40 has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Oil-Dri Corporation Of America has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Earnings & Valuation

This table compares WD-40 and Oil-Dri Corporation Of America’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WD-40 $381.10 million 4.01 $80.20 million $3.70 29.47
Oil-Dri Corporation Of America $261.45 million 1.17 $28.61 million $2.02 20.71

WD-40 has higher revenue and earnings than Oil-Dri Corporation Of America. Oil-Dri Corporation Of America is trading at a lower price-to-earnings ratio than WD-40, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for WD-40 and Oil-Dri Corporation Of America, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WD-40 0 3 0 0 2.00
Oil-Dri Corporation Of America 0 0 0 0 N/A

WD-40 currently has a consensus target price of $108.67, indicating a potential downside of 0.35%. Given WD-40’s higher possible upside, equities research analysts clearly believe WD-40 is more favorable than Oil-Dri Corporation Of America.

Summary

WD-40 beats Oil-Dri Corporation Of America on 10 of the 15 factors compared between the two stocks.

About WD-40

WD-40 Company is a global company engaged in developing and selling products, which solve problems in workshops, factories and homes. The Company’s segments include the Americas; Europe, Middle East and Africa (EMEA), and Asia-Pacific. The Company’s Americas segment includes the United States, Canada and Latin America. The EMEA segment includes countries in Europe, the Middle East, Africa and India. The Asia-Pacific segment includes Australia, China and other countries in the Asia region. The Company has two product groups, which include maintenance products and homecare and cleaning products. As of August 31, 2016, the Company marketed and sold its products in more than 176 countries and territories around the world primarily through mass retail and home center stores, warehouse club stores, grocery stores, hardware stores, automotive parts outlets, sport retailers, independent bike dealers, online retailers and industrial distributors and suppliers.

About Oil-Dri Corporation Of America

Oil-Dri Corporation of America is engaged in developing, manufacturing and/or marketing sorbent products. The Company operates through two segments: Retail and Wholesale Products Group, and Business to Business Products Group. The Retail and Wholesale Products Group’s customers include mass merchandisers, wholesale clubs, drugstore chains, dollar stores, distributors of industrial cleanup and automotive products, environmental service companies and sports field product users. The Business to Business Products Group’s customers include processors and refiners of edible oils, petroleum-based oils and biodiesel fuel; manufacturers of animal feed and agricultural chemicals; distributors of animal health and nutrition products, and marketers of consumer products. Its products include agricultural and horticultural products, animal health and nutrition products, bleaching clay and purification aid products, cat litter products, industrial and automotive products, and sports products.

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