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RPM International Goes Negative

By Seth Jayson – Updated Apr 10, 2017 at 1:55PM

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Just the facts, Fool.

RPM International (NYSE: RPM) reported earnings on April 4. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Feb. 28 (Q3), RPM International met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share increased significantly. GAAP earnings per share shrank to a loss.

Gross margins expanded, operating margins dropped, net margins contracted.

Revenue details
RPM International booked revenue of $843.7 million. The four analysts polled by S&P Capital IQ anticipated revenue of $841.3 million on the same basis. GAAP reported sales were 9.1% higher than the prior-year quarter's $773.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.07. The eight earnings estimates compiled by S&P Capital IQ anticipated $0.06 per share. Non-GAAP EPS of $0.07 for Q3 were 40% higher than the prior-year quarter's $0.05 per share. GAAP EPS were -$0.33 for Q3 compared to $0.05 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 40.7%, 150 basis points better than the prior-year quarter. Operating margin was 3.0%, 30 basis points worse than the prior-year quarter. Net margin was -5.0%, 590 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.19 billion. On the bottom line, the average EPS estimate is $0.68.

Next year's average estimate for revenue is $4.12 billion. The average EPS estimate is $1.80.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 347 members out of 372 rating the stock outperform, and 25 members rating it underperform. Among 97 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 95 give RPM International a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on RPM International is outperform, with an average price target of $31.60.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

RPM International Stock Quote
RPM International
$104.57 (0.33%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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