Analysts’ revenue expectations
As of December 20, 2017, analysts expected RPM International (RPM) to report revenue of $1.3 billion in fiscal 2Q18. The expected revenue represents growth of 6.7% year-over-year. In fiscal 2Q17, RPM reported revenue of $1.2 billion. Between 2012 and 2017, RPM’s second-quarter revenue grew at a CAGR (compound annual growth rate) of 4.4%. Analysts expect RPM’s fiscal 2Q18 revenue growth to be higher than its five-year CAGR.
Whereas some factors have helped RPM, others have had an adverse impact. The continued weakness in the dollar could boost RPM’s revenue. A major revenue push is expected to come from the nine acquisitions that RPM made in fiscal 2017, of which RM expects combined revenue of ~$220 million per year. Other positive factors include RPM’s initiative to increase product prices to overcome the challenge of high raw material prices. Non-residential construction has shown growth, which could be favorable to RPM.
On the other hand, South America appears to be challenging, with difficult economic conditions. The expiry of RPM’s edible coating patent could also impact its revenue.
Investors can get exposure to RPM International stock through the PowerShares DWA Basic Materials Momentum Portfolio ETF (PYZ), which has a 1.2% exposure to RPM international. PYZ’s other holdings include LyondellBasell (LYB), FMC (FMC), and Chemours (CC), which had weights of 5.2%, 5.1%, and 4.9%, respectively, as of December 20, 2017. In the next part, we’ll discuss analysts’ expectations for RPM’s fiscal 2Q18 earnings.