WD-40 (WDFC -6.75%) stock fell 6.3% through 11:30 a.m. ET Monday despite the company beating forecasts in its fiscal Q1 2025 earnings report, released after close of trading last Friday.

Analysts had expected WD-40 to earn only $1.26 per share in Q1, but the company actually earned $1.39 per share, a significant "beat."

WD-40 Q1 earnings

Sales for the quarter were $153.5 million, about 9% better than quarterly earnings one year ago, and WD-40 expanded its gross profit margin by 1 full percentage point to 54.8%.

Selling, general, and administrative spending, however, grew faster than sales, rising 14%, and advertising and sales promotions expense rose 20%. The net effect of this was to balance out the improvement in gross margins such that earnings per share grew almost precisely as much as sales, up 9%.

Is WD-40 stock a sell?

So why aren't investors happy with WD-40 today? Presumably, the problem has more to do with guidance for the rest of fiscal 2025 than with actual results in Q1.

"As I look around the world," says WD-40 CEO Steve Brass, "all I see is opportunity." Yet for 2025, WD-40 sees sales growing only between 6% and 11%. Taken at the midpoint, this is a forecast for sales growth slower in the rest of 2025 than in Q1. Similarly, management's forecast for a gross profit margin between 54% and 55% implies a slight decline from Q1's 54.8%. And management also says that it will earn only between $5.20 and $5.45 per share this year.

At the midpoint, that's less than the $5.36 that Wall Street was hoping for -- and only about 2% better than what WD-40 earned in fiscal 2024.

Is 2% annual earnings growth enough to justify WD-40's stock price, which is currently a steep 46 times trailing earnings? I'd argue it is not. And today, it seems most investors agree with me and are selling WD-40 stock.