On Thursday, RBC Capital Markets adjusted its stock price target for RPM International (NYSE:RPM), a manufacturer of specialty coatings, sealants, and building materials. The firm increased the target to $126.00 from $120.00 and sustained a Sector Perform rating on the stock.
The revision follows RPM International's recent earnings report, which demonstrated a robust quarter with enhanced margins attributed to the company's MAP 2025 initiative and earnings per share growth driven by debt reduction. Despite the positive performance, certain challenges were noted, including headwinds in the do-it-yourself (DIY) and residential sectors, as well as broader macroeconomic issues, particularly in Europe.
RBC Capital acknowledged the company's operational leverage is on an uptrend, thanks to reduced selling, general, and administrative expenses (SG&A) and increased capacity from operational improvements. However, the firm has slightly reduced its forward-looking estimates for RPM's EBITDA, setting it at $293 million for the second fiscal quarter of 2025 and $1.20 billion for the full fiscal year, down from previous estimates of $301 million and $1.215 billion, respectively.
The price target increase to $126 reflects a higher valuation multiple, moving from 14 times to 15 times. This adjustment is based on the firm's confidence in RPM's operational progress and expected benefits from interest rate movements in the future. The Sector Perform rating indicates that RBC Capital anticipates the company's stock performance to be in line with the average returns of the sector.
In other recent news, RPM International has been making headlines with its financial performance and legal developments. The firm's first-quarter earnings surpassed expectations, leading Seaport Global Securities to raise RPM's share target to $150, while maintaining a Buy rating.
Meanwhile, Wells Fargo revised its earnings per share (EPS) estimate for RPM International from $1.29 to $1.32 for the second fiscal quarter of 2025, marking a year-over-year increase of 9%. This adjustment is based on an expected EBITDA of $293 million, a 6% rise from the previous year. RPM also reported a record performance in its Q4 and FY 2024 results, marking its 10th consecutive quarter of record adjusted EBIT, with a 12% increase, and record-high sales.
On the legal front, RPM International faces a $190 million jury verdict in a dispute involving one of its subsidiaries, which the company plans to challenge. In terms of analyst notes, BMO Capital adjusted the price target for RPM International to $139, maintaining an Outperform rating on the stock.
JPMorgan set a price target for RPM shares at $120.00, reflecting a cautious stance due to expectations of a slowdown in the DIY consumer segment and other headwinds. These are among the recent developments at RPM International Inc.
InvestingPro Insights
RPM International's recent performance aligns with several InvestingPro metrics and tips. The company's market cap stands at $16.44 billion, with a P/E ratio of 25.16, reflecting investor confidence in its earnings potential. This is further supported by an InvestingPro Tip indicating that RPM has maintained dividend payments for an impressive 52 consecutive years, demonstrating financial stability and shareholder commitment.
The company's strong recent performance is evident in its 19.49% price total return over the last three months, and a 39.95% return over the past year. This aligns with the InvestingPro Tip highlighting RPM's strong return over the last three months and five years. Moreover, the stock is trading near its 52-week high, with its current price at 98.25% of the 52-week high.
RPM's dividend yield of 1.44% and dividend growth of 9.52% in the last twelve months underscore its appeal to income-focused investors. The company's ability to raise its dividend for 10 consecutive years, as noted in another InvestingPro Tip, further reinforces its financial strength and commitment to shareholder returns.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for RPM International, providing a deeper understanding of the company's financial health and market position.
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