Mizuho maintains Outperform rating on RPM International stock, highlighting NovQ upside By Investing.com

On Thursday, Mizuho Securities maintained its positive stance on RPM International Inc. (NYSE:), a manufacturer of specialty coatings, sealants and building materials, by raising their price target to $139.00 from $134.00. The company continues to uphold an Outperform rating on the stock, indicating a positive outlook on its performance.

RPM International recently provided guidance for the November quarter, anticipating a mid-percent increase in earnings before interest and tax (EBIT) year over year. This forecast exceeds the 3% estimate previously expected by Mizuho Securities. The company’s adjusted earnings per share (EPS) for the August quarter was $1.84, above Mizuho’s estimate of $1.73 and the consensus of $1.75 from Bloomberg.

The company’s total adjusted EBIT rose 6% year over year, even as volume remained relatively flat. This growth is due to market-based pricing and raw material costs which appear to have remained stable on a quarterly basis. Despite this positive performance, RPM International has elected not to revise its full-year outlook for May 2025 at this time.

The decision was due to continued weakness in consumer do-it-yourself (DIY) sales, which account for a third of the company’s revenue, along with other factors such as potential stabilization of tailwinds and residential original equipment manufacturer (OEM) uncertainty. Reactions to interest rate cuts.

The company’s cautious stance reflects the unpredictable nature of the current market, especially in the residential and consumer sectors. While the recent rise in results provides a positive signal, RPM International is carefully monitoring broader economic indicators that could impact the progress of its business.

In other recent news, RPM International made headlines with earnings reports, analyst revisions and legal developments. The company’s latest earnings report showed strong quarterly performance, with boosted margins attributed to the company’s MAP 2025 initiative and earnings per share growth driven by debt reduction.

However, headwinds were observed in the DIY and residential sectors, as well as broader macroeconomic issues, especially in Europe. Analysts RBC Capital, Seaport Global Securities, Wells Fargo and BMO Capital revised their price targets for RPM International, with a range of $126 to $150, while maintaining different ratings on the stock.

The adjustments are based on the company’s financial performance and analysts’ expectations for future earnings. RPM International’s fourth-quarter and fiscal 2024 results represent the 10th consecutive quarter of record adjusted EBITDA, with a 12% increase and record sales. Wells Fargo revised its earnings per share (EPS) estimate for RPM International from $1.29 to $1.32 for the fiscal second quarter of 2025, representing a 9% increase year over year.

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 appeal.

InvestingPro Insights

RPM International’s recent performance and Mizuho’s upgraded price target are supported by several key metrics from InvestingPro. The company’s market value is $16.44 billion, which reflects its large presence in the specialty chemicals sector. RPM’s P/E ratio of 25.16 suggests that investors are willing to pay a premium for its shares, perhaps due to its consistent dividend history and growth prospects.

InvestingPro Tips highlights that RPM has raised its dividend for 10 straight years and has maintained its dividend for an impressive 52 consecutive years. This demonstrates the company’s commitment to shareholder returns, which is in line with recent positive earnings guidance. The current dividend yield is 1.44%, with notable earnings growth of 9.52% over the past 12 months.

The company’s financial health appears strong, with InvestingPro data showing that liquid assets exceed short-term liabilities. This strong balance sheet position supports RPM’s ability to weather market uncertainties, as noted in the article regarding weak consumer DIY sales and potential economic headwinds.

RPM stock has performed particularly strong, with a total return of 39.95% over the past year and a return of 19.49% in the past three months. This is in line with the article’s mention of the company’s better-than-expected earnings and Mizuho’s optimistic outlook.

For investors looking for a more comprehensive analysis, InvestingPro offers 12 additional tips for RPM International, providing deeper insights into the company’s financial health and market performance.

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