RPM International’s Quarterly Results Top Analysts’ Expectations

RPM International, a manufacturer and seller of specialty chemicals, reported better-than-expected fiscal 3Q (ended Feb. 28) results, with top-line growth being the primary driver.

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RPM International’s (RPM) 3Q net sales increased 8.1% year-over-year to $1.27 billion and exceeded the consensus estimate of $1.21 billion. The outstanding performance was driven by a 6.4% rise in Construction Products Group net sales, a 19.8% increase in Consumer Group net sales, and a 14.7% jump in the Specialty Products Group sales. These positives were partly mitigated by an 11.4% decline in Performance Coatings Group net sales.

Adjusted earnings surged 65.2% on a year-over-year basis to $0.38 per share and beat the Street estimates of $0.29 per share. (See RPM International stock analysis on TipRanks)

RPM International CEO Frank C. Sullivan said, “Based on the information we have on hand today, we expect our fiscal 2021 fourth-quarter sales to increase by double digits compared to the fiscal 2020 fourth quarter …Excluding our non-operating segment, adjusted EBIT for our four operating segments in total is expected to increase by more than 20%.”

“At the conclusion of our fourth quarter, we expect to exceed the targeted MAP to Growth program’s planned run rate of $290 million in annualized savings,” Sullivan added.

On March 4, Vertical Research analyst Kevin McCarthy upgraded the stock to Buy from Hold and maintained a price target of $98 (3.9% upside potential), based on the view that risks are now “priced in.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 Buys and 2 Holds. The average analyst price target of $100 implies 6% upside potential to current levels. Shares have jumped 51% over the past year.

Additionally, RPM International scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.