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RPM International (RPM) to Report Q2 Earnings: What's in Store?

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RPM International Inc. RPM is scheduled to report second-quarter fiscal 2021 results on Jan 6, before the opening bell.

In the last reported quarter, the company’s sales and earnings topped the Zacks Consensus Estimate by 7.9% and 19% and grew 9.1% and 51.6% on a year-over-year basis, respectively. The upside was driven by the 2020 MAP to Growth initiative, strong pricing and a strategically-balanced business model.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has trended upward over the past 30 days to $1.00 from 99 cents per share. The estimated value indicates a 31.6% increase from the year-ago earnings of 76 cents per share. The consensus mark for revenues is $1.46 billion, suggesting a 4.2% year-over-year improvement.

Factors to Consider

Resilient housing and home improvement markets are expected to have aided RPM’s revenues in the fiscal second quarter. This along with accretive buyouts adds to the positives. RPM expects to have generated net sales growth in low-to mid-single digits year over year in the fiscal second quarter. The company’s adjusted EBIT is expected to increase more than 20% for the fiscal second quarter. Efficient execution of the MAP to Growth program and Ali acquisition are expected to have contributed to its top line.

The company expects Construction Products Group and Performance Coatings Group sales to decrease in the fiscal second and third quarter and increase in the final quarter of fiscal 2021. On the other hand, the Specialty Products Group sales are expected to remain flat in the first half but improve in the final half of fiscal 2021. Encouragingly, Consumer Group’s revenues will continue to grow on the rise in demand for the next few quarters, courtesy of strong housing market and new home improvement projects.

Meanwhile, the company is focused on cost-containment efforts by closing plants, merging IT system, centralizing more of its back-office functions and rationalizing its manufacturing footprint. However, it anticipates certain raw materials, and packaging-related inflation and additional overhead expenses resulting from the ongoing investments in capacity to build pressure on the bottom line.

RPM International Inc. Price and EPS Surprise

RPM International Inc. Price and EPS Surprise
RPM International Inc. Price and EPS Surprise

RPM International Inc. price-eps-surprise | RPM International Inc. Quote

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for RPM this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: Earnings ESP for RPM is -0.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company, which shares space with The Sherwin-Williams Company SHW, TopBuild Corp. BLD and Armstrong World Industries, Inc. AWI in the Zacks Construction sector, currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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