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Is RPM International (RPM) Undervalued Ahead Of Its October Earnings Report?

Simply Wall St · 1d ago

RPM International (RPM) is back in focus as traders watch for the upcoming August-quarter earnings release on October 6, with expectations for higher year-on-year profit and sales but mixed signals on the odds of an earnings beat.

RPM International’s recent share price has drifted lower, with the stock down 6.26% over the past month and 9.68% over 3 months. The 1 year total shareholder return has declined 13.48% yet remains positive over 3 and 5 years, suggesting that near term momentum has faded even as the longer record still reflects gains.

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Bulls point to RPM International’s long record of shareholder gains and a share price now trading well below analyst and intrinsic value estimates. Bears focus on the recent slide and earnings uncertainty. Which story do the numbers lean toward as valuation comes into focus?

Most Popular Narrative: 23% Undervalued

RPM International’s most followed narrative points to a fair value of $130.00, which sits well above the last close at $99.97 and frames the current pullback as a valuation gap rather than a collapse in the business case.

The main thing that has to go right is that RPM International continues to execute on its MAP cost and SG&A programs while maintaining growth in maintenance focused segments and integrating acquisitions and emerging market expansion without eroding profitability.

The numbers imply a share price that does not fully reflect RPM International’s record adjusted EBIT delivery, substantial operating cash flow and shareholder returns, and the earnings potential from planned SG&A savings and platform growth initiatives.

See why 10 investors see RPM International as 23% undervalued.

Result: Fair Value of $130.00 (UNDERVALUED)

Still, RPM International’s story can unravel if Consumer segment volume pressure persists and raw material inflation keeps outpacing pricing, which would squeeze margins just as efficiency gains are being counted on.

Find out about the key risks to this RPM International narrative.

Next Steps

With sentiment on RPM International clearly split between concern and optimism, consider acting promptly, review the data for yourself, then weigh the 5 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.