RPM International Inc. RPM is benefiting from the implementation of its MAP 2025 operational initiatives. The company’s diverse product portfolio, rising infrastructure demand and emphasis on repair and maintenance services support its growth.

RPM recently announced its second-quarter fiscal 2025 results, with earnings and sales surpassing the Zacks Consensus Estimate by 3% and 3.7%, respectively. On a year-over-year basis, earnings and sales increased 13.9% and 3%, respectively. The company reported record-high adjusted EBIT for the 12th consecutive quarter and adjusted EPS in the fiscal quarter, thanks to the efficient execution of the MAP 2025 initiatives.

Shares of this Medina, OH-based specialty chemicals manufacturer have surged 10% in the past six months, outperforming 8.4% growth in the Zacks Paints and Related Products industry. The stock has also surpassed the broader Construction sector and the S&P's increase of 0.4% and 5%, respectively, during the same period. However, increased cost structure and foreign currency woes are headwinds.

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Attractive Factors of RPM Stock

Driving Efficiency With MAP 2025 Initiatives: RPM International continues to advance its MAP 2025 initiative, unveiled in August 2022, aimed at improving operational efficiencies and creating value through 2025. In the past three years, the company has steadily implemented these improvements while navigating varying economic conditions to surpass market growth.

In the second quarter of fiscal 2025, RPM achieved a record-high adjusted EBIT of $255.1 million, indicating a 7.7% year-over-year increase. The company also reported record adjusted earnings per share, supported by improved sales and streamlined SG&A structures. Owing to the success of its efficiency-driven approach, RPM has narrowed its consolidated adjusted EBIT outlook for fiscal 2025 to 6% to 10% growth and plans to continue implementing MAP 2025 initiatives through fiscal 2026.

Capitalizing on Infrastructure Demand: RPM International is benefiting from the increasing demand for infrastructure in global markets. The company’s focus on repair and maintenance, along with its expansion into new construction sectors, has driven growth in RPM’s Construction Products Group and Performance Coatings Group.

In the second quarter of fiscal 2025, net sales increased 3% from the prior year’s level, driven by higher volumes across all four segments. Strong performance was noted in technical solutions for high-performance construction, while residential markets showed signs of stabilization, supported by favorable weather conditions. Geographically, sales in Africa / Middle East (2% of total sales) grew 11.6%, aided by spending on high-performance construction and infrastructure projects.

Working Capital Efficiency & Shareholder Returns: RPM International continues to make progress in improving working capital efficiency. In second-quarter fiscal 2025, working capital as a percentage of sales declined 100 basis points (bps) compared with last year and 670 bps from two years ago, supported by MAP 2025 initiatives. Operational cash flow during the fiscal quarter reached $279 million, marking the second-highest in the company's history. Strong cash flow over the past year enabled RPM to reduce debt by $226 million.

RPM remains focused on delivering value to its shareholders through consistent returns and strategic capital allocation. In the fiscal second quarter, RPM increased its dividend for the 51st consecutive year. During the first six months of fiscal 2025, the company returned $159.5 million to its stockholders through cash dividends and share repurchases.

Factors Marring RPM’s Prospects

Increased Costs & Currency Woes: RPM’s business has been witnessing higher costs and expenses related to restructuring, divestitures and labor inflation. RPM International incurred $7.6 million of restructuring expenses in the second quarter of fiscal 2025 compared with $1.2 million in the year-ago comparable period. The company expects wage inflation to continue into fiscal 2025 with moderate raw material cost increases in the second half of the year.

The company’s growth prospects are also hindered by foreign currency woes. In the fiscal second quarter, currency headwinds reduced consolidated net sales by 0.6%.

Tepid Sales View: Owing to demand softness in DIY and specialty OEM markets, the company expects its fiscal 2025 net sales growth to be in low-single digits with third-quarter fiscal 2025 net sales to be flat year over year. The company expects the mixed macro environment to persist in the fiscal third quarter, with weather-related headwinds negatively impacting DIY demand and certain construction activities.

RPM’s Zacks Rank & Key Picks

RPM International currently carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks from the Construction sector.

Weyerhaeuser Company WY currently sports a Zacks Rank of #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

WY delivered a trailing four-quarter earnings surprise of 41.6%, on average. The stock has lost 3.1% in the past six months. The consensus estimate for WY’s 2025 sales and earnings per share (EPS) indicates an increase of 8% and 71%, respectively, from a year ago.

MasTec, Inc. MTZ currently sports a Zacks Rank #2 (Buy). MTZ delivered a trailing four-quarter earnings surprise of 40.2%, on average. The stock has jumped 48.4% in the past six months.

The Zacks Consensus Estimate for MTZ’s 2025 sales and EPS implies an increase of 8.8% and 43.4%, respectively, from a year ago.

AECOM ACM presently carries a Zacks Rank #2. It delivered a trailing four-quarter earnings surprise of 5.2%, on average. Shares of ACM have rallied 22% in the past six months.

The Zacks Consensus Estimate for ACM’s fiscal 2025 EPS implies an increase of 12.8% from the prior-year levels.

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