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Have Analysts Changed Their Views on RPM International?

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Oct. 9 2017, Updated 9:38 a.m. ET

Analyst consensus

Post 1Q18, there hasn’t been any change in the number of analysts actively tracking RPM International (RPM). 54% of the analysts tracking the stock recommend a “buy” for RPM, 46% of the analysts recommend a “hold,” while none of the analysts have recommended a “sell.”

However, post 1Q18, analyst consensus on RPM International for the next 12 months has fallen marginally to $56.70 compared to $56.80 before 1Q18 earnings. This implies a return potential of 9.8% from the closing price of $51.63 as of October 5, 2017.

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RPM beat analysts’ revenue and earnings expectations, but there are concerns about the contracting margins and the rising raw material prices. It remains to be seen how RPM overcomes these challenges in the upcoming quarter. However, RPM maintained its fiscal 2018 diluted earnings per share (or EPS) guidance to be in the range of $2.85 to $2.95. As a result, many analysts are recommending the stock as a “hold” or a “buy.”

Individual recommendations from brokerage firms

  • Seaport Global Securities has rated RPM as a “buy” with a recommended target price of $60, which implies a return potential of 16.2% over the closing price of $51.63 as of October 5, 2017.
  • Evercore (EVR) has rated RPM as a “buy” with a target price of $59.0, implying a return potential of 14.3% from the closing price of $51.63 as of October 5, 2017.
  • Wellington Shields has recommended RPM as “Accumulate” but didn’t provide any target price.

Investors can indirectly hold RPM by investing in the ProShares Ultra Basic Materials (UYM), which has invested 0.70% of its holdings in RPM. The fund also provides exposure to Monsanto (MON) and LyondellBasell (LYB), which have weights of 5.2% and 3.2%, respectively, as of October 5, 2017.

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