(RPM) RPM International Inc. – Earnings in the Fiscal First Quarter 2010

November 10th, 2009

RPM International Inc. (RPM) recently raised its dividend for the 36th consecutive year. Analysts expect earnings growth of 20.41% in fiscal 2010.

Company Description

RPM International is a holding company for subsidiaries that manufacture specialty coatings and sealants for industrial and consumer customers. Its industrial segment produces roofing systems, sealants, corrosion control coatings and specialty chemicals under the brands Tremco, Day-Glo, Euco and Dryvit, among others.

On the consumer side, its products are used for home maintenance, boat repair and by hobbyists. Those brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors.

RPM Raised Dividend by 2.5%

When everyone else is cutting dividends, RPM continues to not only reward its shareholders but also increased its dividend for the 36th consecutive year.

On Oct 8, the company increased its dividend by 2.5% to 20.5 cents from 20 cents paid last year. It’s current dividend yield is a hefty 4.50%.

Record Earnings in the Fiscal First Quarter 2010

On Oct 5, RPM reported fiscal first quarter 2010 earnings that surprised on the Zacks Consensus Estimate by 29.55%. Earnings per share were a record 57 cents, or 7.3% higher than the 53 cents reported a year ago. The Zacks Consensus called for just 44 cents. Cost cutting allowed for the EPS growth.

Sales, however, fell 7.1% to $916 million from $985.5 million in fiscal first quarter 2009. Gains in the consumer end of the market offset weakness in the industrial segment. Consumer sales, which were 34.5% of the quarter’s sales, grew 12.5%.

Sales in the larger industrial segment fell 14%. The industrial market continues to endure a struggling commercial construction environment and reduced spending.

Fiscal 2010 Outlook

The company is cautiously optimistic given the better than expected first quarter results.

“The sequential increase in sales from the fiscal 2009 fourth quarter of 6.8% is a marked change from previous years where the first quarter is typically lower than the fourth quarter. We see this as a bullish sign of a slowly improving economy,” said Frank C. Sullivan, chairman and CEO.

RPM forecasts that it will be at higher end of its prior EPS guidance of 5% to 25% over the $1.05 earned in fiscal 2009.

Zacks Consensus Estimates Rise

Analysts have moved in-line with the company’s full year projections. Second quarter Zacks Consensus Estimates are up 2 cents to 33 cents in the last 60 days.

The full year consensus estimate has also jumped to $1.26 from $1.21 in the last 2 months.

Value Fundamentals

RPM International is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 14.53 and a price-to-book ratio of 1.93. The company also has an outstanding 5-year average return on equity (ROE) of 16.44%.

Zacks Investment Research

More on this topic (What's this?)
Member Q&A: RPM International (tickerspy.com, 10/26/09)
RPM International Increases Dividend 2.5% (Disciplined Approach to Investing, 10/8/09)
Wealthy Congressmen Don't Feel Your Pain (Money Morning, 1/9/12)
Investor Sentiment: Looking Like Q4, 2010 (Comments for thetechnicaltake, 1/28/12)
Read more on RPM, Chun Yuan Steel at Wikinvest

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