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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 73-year-old brand headquartered in San Diego just posted one of the cleanest earnings beats of the entire quarter. Almost nobody noticed until after the close.

Here’s what actually happened.

WD-40 Company (WDFC) delivered fiscal Q3 2026 net sales of $195.1 million, up 24% year over year, while adjusted diluted EPS surged 51% to $2.33. That $2.33 beat the analyst consensus of $1.57 by $0.76, a 47% earnings surprise. Revenue cleared estimates by roughly $22 to $25 million depending on the source. Both lines, top and bottom, weren’t close.

Investors responded accordingly. Shares surged over 15% in after-hours trading to approximately $275.99, well above the stock’s previous 52-week high of $253.24.

Let’s slow down on that EPS number for a second. A 47% beat versus consensus isn’t a rounding error. That’s a business doing something very different than what analysts modeled.

What Actually Drove the Move

Net sales increased 24%, driven by double-digit growth across all three geographic segments. 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.

The regional breakdown was broad-based. Americas net sales rose 29% to $101.2 million. EIMEA (Europe, India, Middle East, Africa) increased 17% to $66.6 million. Asia-Pacific grew 24% to $27.3 million. No single region carrying the others.

CEO Steve Brass attributed the performance to the company’s Must-Win Battles strategy, focused on geographic expansion and premium products. Management pointed to double-digit year-to-date growth across geographic expansion, WD-40 Specialist, premiumized products, and e-commerce.

The Numbers

• Total net sales: $195.1 million, up 24% year over year
• Adjusted diluted EPS: $2.33 vs. $1.57 consensus estimate
• Earnings surprise: +47%
• Operating income: $40.3 million, up 47%
• Gross margin: 56.6%
• Updated FY2026 guidance: reported net sales of $675 to $690 million, non-GAAP EPS of $6.05 to $6.35
• New $100 million share repurchase authorization, effective September 1, 2026
• Quarterly dividend: $1.02 per share, payable July 31, 2026

The revenue guidance of $675 million to $690 million on a reported basis compares to a prior consensus of roughly $653 million to $675 million depending on the source. That’s not a small revision. The EPS guidance midpoint of $6.20 sits above the prior consensus of $5.99.

Why the Stock Was Down Before Earnings

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 situation where an earnings gap is especially jarring. Shares trading below fair value, the company beats dramatically, and after-hours buyers step in 15% above the close.

Slight tangent, but it’s relevant: the stock’s 52-week low was $175.38. After the after-hours move, WDFC is trading well above its prior ceiling of $253.24. That changes the technical conversation entirely.

What the Bears Will Say

Fair. Gross margin improved to 56.6% this quarter, but the company is guiding for a full-year gross margin 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 geopolitical tensions in the Middle East. The consolidated 56.6% gross margin headline masks that segment-level pressure.

So the forward margin picture is messier than the headline suggests. Anyone buying the after-hours gap needs to understand that 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. Asia-Pacific and Europe price increases are expected to flow through in late fiscal 2026 and into fiscal 2027. That’s a recovery thesis that requires time.

Jefferies kept its Hold rating but raised its price target to $245, noting that while sales are moving higher, elevated input costs should squeeze margins through the first half of fiscal 2027 despite the recently announced price hikes. DA Davidson was more constructive, raising its target to $305 and keeping a Buy rating.

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, penetration in most emerging markets is still low, and the unit economics get better at scale.

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 seven insider buys and no insider sells. That’s not a coincidence.

What to Watch Next

The fiscal Q4 report is expected around October 2026. Prior to this beat, analysts were projecting roughly $1.62 per share for the coming quarter. Given the guidance raise, that number 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, Q4 results could deliver another upside surprise. If input costs keep climbing due to oil volatility and Middle East tensions, the margin story gets more complicated.

The $100 million buyback becomes active September 1. The company repurchased 31,250 shares for $6.8 million during Q3 under the prior authorization. Near-term buyback support heading into Q4 will be limited until the new program kicks in. That’s a detail worth tracking.

Tonight’s move is real. The question of whether it holds depends entirely on whether the margin compression is temporary or structural. Management says temporary. The Asia-Pacific data from this quarter says Q4 will be the real test.