RPM International Inc. (NASDAQ: RPM) has confirmed that it will release its fiscal Q2 2022 earnings on Wednesday, January 5, 2022, before market open.
What to look for
Earnings: Stockearning’s estimated EPS for fiscal Q2 2022 is expected to be around $0.86 per share, representing a YoY increase of 18%. In the last quarter, the company produced an earnings surprise of 8% with actual EPS of $1.08 relative to consensus estimates of $1. Historical EPS Performance shows that in the past 12 quarters, the company has topped estimates eleven times (91%) and missed once (8%).
Revenue: For the current quarter under review, the company which produces, sells, and markets various chemical compounds is expected to post revenue of $1.5 billion representing a 4% YoY increase from $1.49 billion.
Stock movement: RPM shares have gained 23.7% since the company released its last quarter earnings. Notably, RPM shares have been DOWN 24 times out of the past 47 quarters. So, the historical price reaction suggests a 51% probability of the share price going DOWN once the company reports its fiscal Q2 2022 earnings. According to the Stockearning algorithm, the predicted first-day move is 2%, while the predicted move on the seventh day is 3%.
What analysts are saying
RPM was downgraded from Buy to Hold by Vertical Research analyst Kevin McCarthy, who set a price target of $96. While the company is anticipated to recover for the rest of fiscal 2022 and into 2023, McCarthy cautions investors that the "trajectory is arguable" due to supply chain difficulties' intrinsic volatility and continuous cost inflation, and expectations appear to be high. According to the analyst, comparisons are becoming increasingly tough, and his EPS expectations for RPM remains "slightly below consensus."
RBC Capital analyst Arun Viswanathan reduced RPM's price target from $89 to $87, maintaining a Sector Perform rating on the stock. The analyst cites the impact of raw - materials inflation and supply chain interruptions in lowering his FY21 and FY22 EPS estimates by 7c and 6c, respectively, to $3.96 and $4.69. However, Viswanathan adds that if demand continues resilient following supply chain constraints, driving EBITDA margins closer to 15% -16%, he might become more bullish on RPM.
BMO Capital’s John McNulty slashed his price target on the stock from $197 to $100 but maintained a "Buy" rating on the stock. According to the analyst, the company's Q4 results revealed certain near-term difficulties, including a "precarious" raw - materials situation amid considerable inflation. However, according to McNulty, the "bad news is well understood," and he expects the company's shares to continue to thrive as it continues to execute on its development strategy.
Wells Fargo analyst Michael Sison reduced RPM’s rating from “Buy” to “Hold” and lowered the price target from $104 to $95. The analyst anticipates the company's near-term results to be hampered by persistent margin pressure from raw material and input shortages, "capping upside potential in the shares." However, Sison sees a limited possibility for a favorable surprise from RPM's consumer segment until the second half of fiscal 2022, owing to "structural headwinds and the lag in price increases to flow through the businesses," as well as "strong demand" and low inventories across the construction, industrial, and specialty products facing segments.
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