RPM International’s earnings
On January 4, RPM International (RPM) announced its earnings for the second quarter of fiscal 2019. The company reported an adjusted EPS of $0.52—a decline of 8.77% over the adjusted EPS of $0.57 the previous year. RPM International’s adjusted EPS fell short of analysts’ estimates of $0.68.
RPM International reported revenues of $1.36 billion compared to $1.32 billion in the second quarter of 2018—3.6% growth year-over-year. However, RPM International missed analysts’ estimates of $1.38 billion. The revenue growth was mainly driven by organic growth and acquisition growth, while unfavorable foreign currency had a negative impact. Both of RPM International’s reporting segments witnessed revenue growth.
Frank C. Sullivan, RPM’s chairman and CEO said, “We achieved solid top-line improvement with sales growth of 3.6%, despite the unfavorable foreign currency translation effect of 2.0%. Like many manufacturers, our bottom line was impacted by a continued rise in costs for raw materials, freight, labor, and energy, as well as adverse foreign exchange translation.”
RPM International expects to report an EPS of $0.10–$0.12 for the third quarter of fiscal 2019.
RPM International’s stock price
The markets appeared to be disappointed with RPM International’s earnings. The stock price declined ~9.9% for the week and closed at 52.26. Sherwin-Williams (SHW) and Axalta (AXTA) gained 0.2% and 4.1%, respectively, for the week, while PPG Industries (PPG) declined 1.3%. The decline in RPM International’s stock price caused the stock to trade 16.7% below its 100-day moving average price of $62.71
RPM International’s 14-day relative strength index of 26 indicates that the stock has temporarily moved into the oversold position.
Investors could hold RPM International indirectly by investing in the First Trust Dorsey Wright Momentum & Dividend ETF (FXZ). FXZ has invested 2.9% of its holdings in RPM International as of January 4.