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In the last reported quarter, the company’s earnings and net sales missed the Zacks Consensus Estimate by 0.8% and 2.1%, respectively. On a year-over-year basis, earnings increased 10.9% on almost flat sales.
The company’s earnings topped analysts’ expectations in three of the trailing four quarters, with the average surprise being 8.3%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at 48 cents per share over the past 60 days. The estimated value indicates a 29.7% increase from the year-ago earnings of 37 cents per share.
The consensus mark for revenues is $1.51 billion, suggesting a 0.3% year-over-year decline.
RPM’s fiscal third-quarter net sales are likely to have decreased from the prior year’s levels, probably due to lower contributions from the Specialty Products Group (SPG) and Consumer Group (CG) segments. The company has been experiencing softness in demand in Do-It-Yourself or DIY and specialty original equipment manufacturer or OEM markets.
That said, higher contributions from the Performance Coatings Group (PCG) and Construction Products Group (CPG) segments, along with strong pricing and MAP 2025 benefits, are expected to have added to the positives.
For the fiscal third quarter, RPM expects total net sales to be at a flat range year over year.
Segment-wise, the company expects PCG sales to grow in the mid-single digits in the quarter. Strength in energy markets, reshoring manufacturing to the United States and government infrastructure spending are likely to contribute to the growth. We expect PCG sales to grow 4.8% year over year.
CPG is also expected to rise, backed by continued share gains in concrete admixtures, strong roofing and the residential sector’s stabilization. Also, its focus on reshoring infrastructure, building maintenance and restoration bodes well. The company expects segment sales to grow in the mid-single digits. We expect CPG sales to grow 4.8% year over year.
CG sales are likely to be down in the mid-single digits, owing to a decrease in consumer purchases for DIY items at retail stores. This downturn was influenced by a slump in housing turnover, with consumers redirecting their expenditures toward travel and entertainment. Additionally, some retailers engaged in destocking inventories, contributing to lower sales expectations. Our expectation reflects a 1.8% year-over-year sales decline.
SPG’s revenues are expected to decline in the mid-teens year over year due to mainly slow residential construction markets. Our projection depicts a 15% year-over-year decline in sales.
Nonetheless, the company’s increased public sector spending, turn-key service model and focus on renovations are likely to have aided the top line in the quarter under review. Prudent cost management and higher pricing are likely to counter the cost inflation.
RPM anticipates its fiscal third-quarter adjusted EBIT growth between 25% and 35%.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for RPM International this time around. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Earnings ESP: The company’s earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: RPM International currently carries a Zacks Rank #4 (Sell).
Stocks With a Favorable Combination
According to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in the quarter to be reported.
KBR’s earnings topped the consensus mark in each of the last four quarters, the average being 6.4%. Earnings for the to-be-reported quarter are expected to grow 3% year over year.
Owens Corning (OC - Free Report) has an Earnings ESP of +4.32% and a Zacks Rank #3.
OC’s earnings topped the consensus mark in all the trailing four quarters, the average surprise being 19.4%. Earnings for the to-be-reported quarter are expected to grow 9.4% year over year.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +4.96% and a Zacks Rank #3.
PWR’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average being 4.9%. Earnings for the to-be-reported quarter are expected to decline 3.2% year over year.
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RPM International (RPM) to Post Q3 Earnings: What to Expect?
RPM International Inc. (RPM - Free Report) is slated to report third-quarter fiscal 2024 results on Apr 4, before the opening bell.
In the last reported quarter, the company’s earnings and net sales missed the Zacks Consensus Estimate by 0.8% and 2.1%, respectively. On a year-over-year basis, earnings increased 10.9% on almost flat sales.
The company’s earnings topped analysts’ expectations in three of the trailing four quarters, with the average surprise being 8.3%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained unchanged at 48 cents per share over the past 60 days. The estimated value indicates a 29.7% increase from the year-ago earnings of 37 cents per share.
The consensus mark for revenues is $1.51 billion, suggesting a 0.3% year-over-year decline.
RPM International Inc. Price and EPS Surprise
RPM International Inc. price-eps-surprise | RPM International Inc. Quote
Factors to Consider
RPM’s fiscal third-quarter net sales are likely to have decreased from the prior year’s levels, probably due to lower contributions from the Specialty Products Group (SPG) and Consumer Group (CG) segments. The company has been experiencing softness in demand in Do-It-Yourself or DIY and specialty original equipment manufacturer or OEM markets.
That said, higher contributions from the Performance Coatings Group (PCG) and Construction Products Group (CPG) segments, along with strong pricing and MAP 2025 benefits, are expected to have added to the positives.
For the fiscal third quarter, RPM expects total net sales to be at a flat range year over year.
Segment-wise, the company expects PCG sales to grow in the mid-single digits in the quarter. Strength in energy markets, reshoring manufacturing to the United States and government infrastructure spending are likely to contribute to the growth. We expect PCG sales to grow 4.8% year over year.
CPG is also expected to rise, backed by continued share gains in concrete admixtures, strong roofing and the residential sector’s stabilization. Also, its focus on reshoring infrastructure, building maintenance and restoration bodes well. The company expects segment sales to grow in the mid-single digits. We expect CPG sales to grow 4.8% year over year.
CG sales are likely to be down in the mid-single digits, owing to a decrease in consumer purchases for DIY items at retail stores. This downturn was influenced by a slump in housing turnover, with consumers redirecting their expenditures toward travel and entertainment. Additionally, some retailers engaged in destocking inventories, contributing to lower sales expectations. Our expectation reflects a 1.8% year-over-year sales decline.
SPG’s revenues are expected to decline in the mid-teens year over year due to mainly slow residential construction markets. Our projection depicts a 15% year-over-year decline in sales.
Nonetheless, the company’s increased public sector spending, turn-key service model and focus on renovations are likely to have aided the top line in the quarter under review. Prudent cost management and higher pricing are likely to counter the cost inflation.
RPM anticipates its fiscal third-quarter adjusted EBIT growth between 25% and 35%.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for RPM International this time around. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Earnings ESP: The company’s earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: RPM International currently carries a Zacks Rank #4 (Sell).
Stocks With a Favorable Combination
According to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in the quarter to be reported.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +3.15% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR’s earnings topped the consensus mark in each of the last four quarters, the average being 6.4%. Earnings for the to-be-reported quarter are expected to grow 3% year over year.
Owens Corning (OC - Free Report) has an Earnings ESP of +4.32% and a Zacks Rank #3.
OC’s earnings topped the consensus mark in all the trailing four quarters, the average surprise being 19.4%. Earnings for the to-be-reported quarter are expected to grow 9.4% year over year.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +4.96% and a Zacks Rank #3.
PWR’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, the average being 4.9%. Earnings for the to-be-reported quarter are expected to decline 3.2% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.