On Thursday, Mizuho Securities maintained its positive stance on RPM International Inc. (NYSE:), a manufacturer of specialty coatings, sealants, and building materials, by raising its price target to $139.00 from $134.00. The firm continues to endorse an Outperform rating for the stock, indicating a favorable outlook on its performance.
RPM International has recently provided guidance for the November quarter, forecasting a mid-single-digit percentage increase in earnings before interest and taxes (EBIT) year-over-year. This projection surpasses the 3% estimate previously anticipated by Mizuho Securities. The company’s adjusted earnings per share (EPS) for the August quarter came in at $1.84, higher than both the $1.73 estimate from Mizuho and the $1.75 consensus from Bloomberg.
The company’s overall adjusted EBIT grew by 6% year-over-year, even with volume remaining relatively flat. This growth is attributed to market-based pricing and raw material costs that appeared to remain stable on a quarter-over-quarter basis. Despite this positive performance, RPM International has chosen not to revise its full-year May 2025 outlook at this time.
The decision is due to the continuing weakness in consumer do-it-yourself (DIY) sales, which represent a third of the company’s revenue, along with other factors such as the potential plateauing of reshoring tailwinds and uncertain residential original equipment manufacturer (OEM) responses to interest rate cuts.
The company’s cautious stance reflects the unpredictable nature of the current market, especially within the residential and consumer sectors. While the recent uptick in results provides a positive signal, RPM International is carefully monitoring the broader economic indicators that could influence its business moving forward.
In other recent news, RPM International has been making headlines with earnings reports, analyst adjustments, and legal developments. The company’s recent earnings report showcased robust quarterly performance, with enhanced margins attributed to the company’s MAP 2025 initiative and earnings per share growth driven by debt reduction.
However, headwinds in the do-it-yourself (DIY) and residential sectors were noted, as well as broader macroeconomic issues, especially in Europe. Analyst firms RBC Capital, Seaport Global Securities, Wells Fargo, and BMO Capital have all adjusted their price targets for RPM International, with a range of $126 to $150, while maintaining various ratings on the stock.
The adjustments are based on the company’s financial performance and the analysts’ expectations of future earnings. RPM International’s Q4 and FY 2024 results marked its 10th consecutive quarter of record adjusted EBIT, with a 12% increase, and record-high sales. Wells Fargo revised its earnings per share (EPS) estimate for RPM International from $1.29 to $1.32 for the second fiscal quarter of 2025, marking a year-over-year increase of 9%.
On the legal front, RPM International faces a $190 million jury verdict in a dispute involving one of its subsidiaries, which the company plans to challenge.
InvestingPro Insights
RPM International’s recent performance and Mizuho’s upgraded price target are supported by several key metrics from InvestingPro. The company’s market capitalization stands at $16.44 billion, reflecting its significant presence in the specialty chemicals sector. RPM’s P/E ratio of 25.16 suggests investors are willing to pay a premium for its shares, possibly due to its consistent dividend history and growth prospects.
InvestingPro Tips highlight that RPM has raised its dividend for 10 consecutive years and has maintained dividend payments for an impressive 52 consecutive years. This demonstrates the company’s commitment to shareholder returns, which aligns with its recent positive earnings guidance. The current dividend yield is 1.44%, with a notable dividend growth of 9.52% over the last twelve months.
The company’s financial health appears robust, with InvestingPro data showing that liquid assets exceed short-term obligations. This strong balance sheet position supports RPM’s ability to navigate market uncertainties, as mentioned in the article regarding consumer DIY sales weakness and potential economic headwinds.
RPM’s stock performance has been particularly strong, with a 39.95% total return over the past year and a 19.49% return in the last three months. This aligns with the article’s mention of the company’s better-than-expected earnings and Mizuho’s optimistic outlook.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for RPM International, providing deeper insights into the company’s financial position and market performance.
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