Since RPM International Inc. (NYSE:RPM) released its earnings in May 2019, analysts seem highly optimistic, as a 58% rise in profits is expected in the upcoming year, relative to the previous 5-year average growth rate of 0.2%. Currently with trailing-twelve-month earnings of US$265m, we can expect this to reach US$420m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for RPM International in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect RPM International to keep growing?
The longer term view from the 10 analysts covering RPM is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$265m and the final forecast of US$549m by 2022, the annual rate of growth for RPM’s earnings is 22%. This leads to an EPS of $4.49 in the final year of projections relative to the current EPS of $2.03. With a current profit margin of 4.8%, this movement will result in a margin of 8.9% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For RPM International, I've compiled three key factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is RPM International worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RPM International is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of RPM International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.