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How RPM International’s Valuation Compares

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Forward price-to-earnings ratio

Previously, we discussed analysts’ views on RPM International (RPM). In this part, we’ll compare RPM’s forward PE (price-to-earnings) ratio with peers’. As of December 20, 2017, RPM’s one-year forward PE ratio stood at 17.5x, while peer PPG Industries (PPG) had a PE ratio of 17.6x.

Forward PE ratios consider a company’s estimated EPS (earnings per share) for the next 12 months. This valuation method helps investors compare two or more companies operating in the same industry.

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RPM trails PPG

RPM’s one-year forward PE ratio is slightly lower than PPG’s. RPM reported strong fiscal 1Q18 earnings, and the trend is expected to continue in the upcoming quarter. RPM will likely continue to benefit from its nine acquisitions, and RPM has acquired two more companies in fiscal 2018 so far. As a result, analysts expect RPM’s adjusted EPS for fiscal 2019 to be $3.14, which represents 9.8% growth year-over-year.

Meanwhile, analysts expect PPG to report adjusted EPS of $6.63 in fiscal 2018, which is 12.3% higher than what was expected in fiscal 2017. Investors looking for indirect exposure to RPM stock could consider the SPDR S&P Dividend ETF (SDY), which has a 1.0% exposure to RPM. SDY’s other holdings include Target (TGT) and Chevron (CVX), which had weights of 1.8% and 1.6%, respectively, as of December 20, 2017.

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