BMO Capital Markets has adjusted its outlook on RPM International Inc (NYSE: NYSE:RPM), a manufacturer of specialty coatings, sealants, and building materials.
The firm increased its price target on the stock to $149 from the previous $139 while maintaining an Outperform rating.
The adjustment follows RPM International's recent financial performance, which showed a significant improvement in profitability.
According to BMO Capital, this is the second quarter in a row where RPM has seen margins improve, even though sales have been weaker. The firm attributes this positive trend to the effective management of RPM's portfolio.
The analyst from BMO Capital believes that RPM International could further benefit from anticipated rate cuts in the second half of 2025. This potential financial environment is expected to contribute to RPM's earnings growth over the next 12 to 18 months.
In the statement released, BMO Capital expressed the view that the market has not fully recognized RPM's growth potential. The firm's revised price target of $149 reflects confidence in the company's earnings trajectory and its ability to outperform market expectations.
In other recent news, RPM International reported strong quarterly earnings, with a mid-single-digit percentage increase in earnings before interest and taxes (EBIT) year-over-year, surpassing Mizuho Securities' previous estimate.
The company's adjusted earnings per share (EPS) for the August quarter were higher than both the Mizuho estimate and the Bloomberg consensus. Despite the robust performance, RPM International has chosen not to revise its full-year May 2025 outlook at this time due to several factors, including the continuing weakness in consumer do-it-yourself (DIY) sales.
RPM International is also facing a $190 million jury verdict in a legal dispute involving one of its subsidiaries, which the company plans to challenge. Among other recent developments, analyst firms including Mizuho Securities, RBC Capital, Seaport Global Securities, Wells Fargo, and BMO Capital have adjusted their price targets for RPM International, reflecting their assessments of the company's financial performance and expectations of future earnings.
Wells Fargo revised its earnings per share (EPS) estimate for RPM International for the second fiscal quarter of 2025, marking a year-over-year increase of 9%. Similarly, Seaport Global Securities increased its price target on RPM International's stock, maintaining a Buy rating, following the company's first-quarter earnings that surpassed expectations.
InvestingPro Insights
RPM International's recent performance aligns with BMO Capital's optimistic outlook. According to InvestingPro data, the company boasts a market capitalization of $16.44 billion and a P/E ratio of 25.16, indicating investor confidence in its growth potential. The company's strong financial health is further evidenced by its liquid assets exceeding short-term obligations, as highlighted by one of the InvestingPro Tips.
InvestingPro Tips also reveal that RPM has raised its dividend for 10 consecutive years and has maintained dividend payments for an impressive 52 consecutive years. This consistent dividend policy underscores the company's financial stability and commitment to shareholder returns, which may be particularly attractive in the anticipated lower interest rate environment mentioned in the article.
The company's stock is currently trading near its 52-week high, with a robust 39.95% total return over the past year. This performance supports BMO Capital's view that RPM has room for further growth. For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for RPM International, providing a deeper understanding of the company's financial position and market prospects.
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