RPM Share Hits Record High Ahead of Q2 Earnings

The U.S.-based paints and coatings company RPM International is expected to report its fiscal second-quarter earnings of $0.86 per share on Wednesday, which represents a year-on-year decline of over 18% from $1.06 per share seen in the same period a year ago.

The company, which manufactures, markets, and sells various specialty chemical products, would post revenue growth of nearly 4% to around $1.5 billion from $1.49 billion a year earlier. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

The company anticipates sales to increase in the mid-single digits for the second-quarter fiscal 2022. The better-than-expected number would help the stock hit a new high. On Monday, RPM International’s shares hit a record high of $101.48. It surged more than 11% in 2021.

Analyst Comments

“Nearly 1/3 of sales are related to US housing and home improvement (the second highest in the industry behind Sherwin-Williams). This continues to be our preferred coatings end market as it benefits from COVID-19 driven home improvement demand, which we think is sustainable. Importantly, RPM has no meaningful auto, aerospace exposure, but does have US infrastructure/construction exposure which could benefit from stimulus policy,” noted Vincent Andrews, equity analyst at Morgan Stanley.

“RPM’s MAP self-help program offers an offset to COVID challenges. Meaningful opportunity remains for improvement in margins, free cash flow conversion, and return of capital to shareholders. Management highlighted upside to MAP targets on recent conference call.”

RPM Stock Price Forecast

Seven analysts who offered stock ratings for RPM International in the last three months forecast the average price in 12 months of $94.29 with a high forecast of $105.00 and a low forecast of $87.00.

The average price target represents a -6.64% change from the last price of $101.00. Of those seven analysts, three rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $97 with a high of $111 under a bull scenario and $72 under the worst-case scenario. The firm gave an “Equal-weight” rating on the paints and coatings company’s stock.

Several other analysts have also updated their stock outlook. Evercore ISI raised the target price $105 from $98. RBC cut the target price to $87 from $89. Baird lowered the target price to $90 from $95. UBS slashed the price objective to $97 from $105.

Technical analysis also suggests it is good to buy as 100-Day Moving Average and 50-200-day MACD Oscillator signals a buying opportunity.

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