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S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
See how to make money instead of spending it on Black Friday with this offer (Ad)
Biden eases Venezuela sanctions as opposition talks resume
Whole Foods decision to pull lobster divides enviros, pols
See how to make money instead of spending it on Black Friday with this offer (Ad)
Airbnb has a plan to fix cleaning fees
Saudi viewers angry over apparent ban on World Cup streaming
See how to make money instead of spending it on Black Friday with this offer (Ad)
Cuba's informal market finds new space on growing internet
Railway workers in Austria to strike Monday in pay standoff
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
See how to make money instead of spending it on Black Friday with this offer (Ad)
Biden eases Venezuela sanctions as opposition talks resume
Whole Foods decision to pull lobster divides enviros, pols
See how to make money instead of spending it on Black Friday with this offer (Ad)
Airbnb has a plan to fix cleaning fees
Saudi viewers angry over apparent ban on World Cup streaming
See how to make money instead of spending it on Black Friday with this offer (Ad)
Cuba's informal market finds new space on growing internet
Railway workers in Austria to strike Monday in pay standoff
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
See how to make money instead of spending it on Black Friday with this offer (Ad)
Biden eases Venezuela sanctions as opposition talks resume
Whole Foods decision to pull lobster divides enviros, pols
See how to make money instead of spending it on Black Friday with this offer (Ad)
Airbnb has a plan to fix cleaning fees
Saudi viewers angry over apparent ban on World Cup streaming
See how to make money instead of spending it on Black Friday with this offer (Ad)
Cuba's informal market finds new space on growing internet
Railway workers in Austria to strike Monday in pay standoff

Bellwether RPM International Pops On Results 

Key Points

  • RPM International posted a strong quarter and shares are moving higher. 
  • Guidance is favorable as well and points to widening margins for the S&P 500.
  • Three factors, however, make PPG Industries the better buy for investors. 
Bellwether RPM International Pops On Results 

RPM International (NYSE: RPM) is a bellwether of sorts making coatings and construction products for a wide range of uses. The company just reported a strong quarter and gave favorable guidance that points to peak inflation and widening margins for the S&P 500 but PPG Industries (NYSE: PPG) is the better buy, now, in the wake of the report. 

RPM International has three things counted against it that make PPG Industries a better value, a better yield, and a stock with more upside potential. The takeaway for investors is that RPM International’s results are good news for the market but don’t rush to buy it now that the shares are back near the all-time highs. If shares of RPM stock are going to rally higher and do so in a meaningful way there will be a better signal. 

RPM International Beats On Strong Organic Results 

RPM International had a really good quarter and set all-time records for most of the important metrics. The company reported $1.93 billion in revenue which is not only a record but up 17% from last year and it beat the Marketbeat.com consensus estimate by 265 basis points as well. The strength was driven by outperformance in all segments that were driven by volume as well as pricing increases. On an organic basis, the company reported sales growth of 19.5% including 1% worth of acquisitions that were offset by a 3.4% FX-related headwind. 

The truly good news in this report is that margins widened and there is little talk of upward price pressures or the need to raise prices any further. The takeaway is that EBIT increased by 29.8% to outpace revenue growth by more than 1000 basis points while adjusted EBIT increased by 33% and net income by 25.6% and all are record levels. In regard to the bottom line, the GAAP EPS is up 31% YOY and the adjusted is up 36% YOY and also beat by a strong $0.14 as well. 


The guidance is also strong as it includes a revenue target above the consensus estimate and an expectation for another 40% YOY increase in margin. The bad news for bulls expecting to see the stock hit a new all-time high, however, is that RPM International is trading at a high 20X its earnings which is about 5 handles greater than the broad market and 2 greater than PPG Industries which holds a near-identical position in the marketplace. 

PPG Industries is also paying a slightly higher 2.1% dividend yield and the analysts are not expecting a record quarter. In fact, the analysts are expecting YOY growth to slow and for revenue to decline on a sequential basis. If PPG Industries' results are even half as good as RPM International it would be a significant outperformance of the consensus and could spark a rally. And the dividend safety? PPG Industries is a Dividend King with a 38% payout ratio. There is not much about this dividend to worry about. 

The Technical Outlook: RPM Pops, PPG Looks Like A Better Buy 

The price action in RPM International was moving higher well before the FQ1 earnings were released and the stock is still moving higher now. Up 3.0% in post-release trading, the stock is, however, very close to resistance and may have a hard time moving much higher. Resistance is consistent with the all-time high and may cap gains until there is more clarity with the economy and the FOMC outlook. PPG Industries, on the other hand, is up a bit off its bottom but lagging behind its competitor and well below potential resistance. Assuming this company performs in a comparable fashion, there is a chance the price action could jump as much as 50% on the news. 

Bellwether RPM International Pops On Results 

Should you invest $1,000 in RPM International right now?

Before you consider RPM International, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and RPM International wasn't on the list.

While RPM International currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
PPG Industries (PPG)
2.5152 of 5 stars
$133.36+0.2%1.86%29.50Moderate Buy$133.83
RPM International (RPM)
2.331 of 5 stars
$103.71+0.1%1.62%25.54Hold$98.88
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.