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RPM International Inc.

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RPM reported fiscal second-quarter results, wherein earnings and revenues missed the Zacks Consensus Estimate by 21.2% and 2.2%, respectively. Also, adjusted earnings fell 8.8% year over year. Consequently, RPM has seen downward estimate revisions for fiscal 2019 and 2020, indicating analysts’ pessimism over the stock’s earnings growth potential. Shares of RPM have declined 12.7% in the past six months. Increased raw material costs and inclement weather have been marring its growth prospects. Increased exposure to foreign markets also makes it susceptible to uncertain macro conditions abroad. Nonetheless, revenues grew 3.6% year over year, given strong 3% organic growth and 2.6% acquisition growth. Acquisition plays an important part of RPM’s growth strategy. The company is on track to curb costs by closing plants, merging IT system, centralizing more of its back-office functions and rationalizing its manufacturing footprint.

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