On Friday, RBC Capital adjusted its outlook on RPM International (NYSE:RPM) Inc, a company traded on the New York Stock Exchange under the ticker NYSE:RPM. The firm increased the price target for RPM International to $120.00, up from the previous $119.00. Despite the slight increase in the target price, RBC Capital maintained a "Sector Perform" rating for the stock.
The new price target reflects a valuation multiple of 14 times, up from 13.5 times, based on RPM International's anticipated share gains, the benefits from its "MAP to Growth" initiative, and the company's strong performance in the infrastructure sector. These positive factors are seen as driving the company's performance, despite some challenges.
RPM International's progress is partly tempered by a mix of headwinds, including a slowdown in commercial construction, do-it-yourself (DIY) projects, residential markets, and broader macroeconomic concerns, particularly in Europe. These elements contribute to the decision to maintain the current rating.
RBC Capital also provided insights into the company's future, lowering its fiscal year 2025 (FY25) estimates while introducing its fiscal year 2026 (FY26) estimates. The analyst's commentary highlighted the balance of RPM International's robust areas such as infrastructure and resilient repair and remodel (R&R) activities, against the headwinds faced in other segments of its business.
The current price target is based on approximately 14 times the firm's estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) for FY25. This calculation underpins RBC Capital's continued assessment of RPM International's stock performance within the sector.
In other recent news, RPM International Inc. 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. The company's operating cash flow reached an impressive $1.12 billion, used to reduce its debt by $557 million. Despite challenging market conditions, RPM's Construction Products Group and Consumer Group showed strong performance.
However, JPMorgan has adjusted its rating on RPM from Overweight to Neutral, anticipating a slowdown in growth and projecting an 11% increase in EPS and a 6% rise in EBITDA for Fiscal 2025. The firm set a price target for RPM shares at $120.00.
For the financial year 2025, RPM expects low single-digit sales growth and mid-single-digit to low-double-digit adjusted EBIT growth. The company's management has outlined initiatives to drive EBIT growth, such as MAP 2025, plant consolidation, and SG&A streamlining.
Despite certain segments facing headwinds, RPM's robust balance sheet and cash flow are expected to enable strategic acquisitions and shareholder value enhancement through dividends and share repurchases.
These are among the recent developments at RPM International Inc.
InvestingPro Insights
With RPM International Inc (NYSE:RPM) on investors' radar after RBC Capital's updated price target, real-time data from InvestingPro provides a deeper dive into the company's financial health and market performance. RPM International's market capitalization stands at a substantial $15.25B, and the stock is trading at a P/E ratio of 24.32, reflecting investor confidence in its earnings capacity. Notably, the company's Price / Book ratio as of the last twelve months is high at 6.08, indicating a premium valuation compared to the book value of its assets.
InvestingPro Tips suggest that RPM International's financial discipline and commitment to shareholders are evident, as the company has raised its dividend for an impressive 10 consecutive years and has maintained dividend payments for over half a century. Additionally, RPM's liquid assets surpass its short-term obligations, showcasing a strong balance sheet. However, analysts have revised their earnings expectations downwards for the upcoming period, signaling potential caution. Moreover, the company is trading near its 52-week high, which may influence investment decisions. For those seeking more insights, InvestingPro offers several additional tips on RPM International, which can be accessed through their platform.
Investors considering RPM International can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further analysis and market insights. With the next earnings date set for October 2, 2024, and the company's recent performance resulting in a 1-year price total return of 15.85%, RPM International's stock continues to be a point of focus in the infrastructure sector.
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