5 Dec

RPM International Rose 7.8% in November

WRITTEN BY Peter Neil

RPM International rose 7.8% in November

RPM International (RPM), a specialty coating company, was strong in November. The stock gained 7.8% and was one of the top gainers among specialty companies in November. RPM International outperformed the broader market S&P 500 (SPY), which gained 1.8% during the same period.

RPM International Rose 7.8% in November

What drove the stock up?

The major push for the stock came from the long-term guidance it provided on its Investor Day. During the event, Frank C. Sullivan, RPM International’s chairman and CEO, revealed a few financial goals for the company to achieve by May 31, 2021.

  • RPM International is targeting annual revenues of $6.25 billion.
  • The company is targeting an EBIT of $1 billion.
  • RPM International aims to return $1.5 billion to shareholders through $1 billion in share repurchases and $500 million in dividends.
  • The company is targeting cost savings of $290 million by December 31, 2020.
  • RPM International wants to reduce the headcount by 500 in fiscal 2019.

RPM International redeemed its 2.25% convertible senior notes due in 2020, which will help to reduce its interest expense.

As a result of the company’s long-term guidance, several brokerage firms increased RPM International’s target price:

  • RBC (RY) raised its target price for RPM International to $66, which implies a 3% potential return over the closing price as of December 4.
  • BMO raised its target price for RPM International to $77, which implies a return potential of 20.1% over the closing price as of December 4.

YTD return

On a YTD (year-to-date) basis, RPM International has gained 22.3%. Sherwin-Williams (SHW) and PPG Industries (PPG) have declined 1.7% and 9.7%, respectively.

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