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RPM International (RPM) Following Record Q1 And Softer Outlook, Does The Undervalued View Hold

Simply Wall St · 1d ago

RPM International (RPM) just posted record first quarter sales and earnings, along with a trimmed full year growth outlook, fresh restructuring progress, an acquisition, and continued share repurchases that reshape its risk reward profile.

RPM International shares edged higher on the earnings release, with a 1-day share price return of 1.12% and a year-to-date share price return that is down 4.17%. The 1-year total shareholder return declined 8.49%, while the 5-year total shareholder return remains positive at 31.71%, suggesting short term momentum has softened even as longer term holders have still seen gains.

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RPM International just paired record Q1 results with a softer outlook and a stock that has lagged recent market enthusiasm. Does that mix still tip the risk reward balance toward new buyers at around $99 a share, or not?

Most Popular Narrative: 21% Undervalued

RPM International’s most followed valuation story points to a fair value of about $126 per share compared with the recent close near $99. This puts the spotlight on whether its execution on margins and cash returns can eventually close that gap.

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 21% undervalued.

Result: Fair Value of $126 (UNDERVALUED)

Still, the bullish story for RPM International runs into real friction if consumer volumes stay weak and raw material inflation continues to squeeze margins for longer than analysts anticipate.

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

Next Steps

Mixed on whether RPM International still offers enough upside relative to the risks on the table as conditions shift. Check the full balance of potential upsides and pressure points in the 6 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.