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In the last-reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 12.2% and 2.3%, respectively. On a year-over-year basis, earnings and net sales increased 36.1% and 17.1%, respectively.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at $1.10 per share over the past 60 days. The estimated value indicates a 39.2% increase from the year-ago earnings of 79 cents per share. The consensus mark for revenues is $1.81 billion, suggesting a 10.3% year-over-year improvement.
RPM’s fiscal second-quarter earnings and revenues are likely to have increased from the prior year’s levels on prudent cost management and solid pricing. Increased public sector spending, its turn-key service model and its focus on renovations are likely to have aided the company’s top line in the quarter.
For second-quarter fiscal 2023, RPM International expects sales to increase 9-12% year over year. The company expects sales growth at Construction Products Group or CPG in the high-single-digit as commercial and infrastructure construction activity is likely to remain positive and pricing management will contribute to growth, partially offset by macroeconomic weakness in Europe.
Performance Coatings Group or PCG sales are anticipated to increase in the high-single-digit to low-double-digit, driven by strength in energy markets, reshoring manufacturing to the United States and government infrastructure spending.
Specialty Products Group or SPG revenue is expected to be up in the high-single-digit, benefiting from continued strength in food coatings and additives. The Consumer Group or CG sales are likely to be up in the teen as a result of improved material supply, pricing management and a favorable comparison to the second quarter of fiscal 2022, when sales were depressed by alkyd resin shortages from an explosion at a supplier’s plant.
The Zacks Consensus Estimate for CPG net sales of $646 million suggests an 11.5% decrease from the previous quarter. The same for PCG sales are likely to decline 5.6% to $321 million from the previous quarter.
The consensus estimate for CG net sales of $555 million suggests a 4.9% increase from a year ago but a decline of 15.8% sequentially. The same for SPG sales are likely to increase 2.1% to $198 million from a year ago but a 2.5% sequential decline.
RPM intends to increase prices for certain raw materials, labor and packaging to forgo unprecedented supply-chain and inflationary woes. Higher costs from unreliable bulk transportation (which creates production inefficiencies) and fuel surcharges (driven by high energy prices) are expected to have affected the CG segment. Also, a strengthening U.S. dollar remains a headwind for the fiscal second quarter.
RPM anticipates the fiscal second quarter’s adjusted EBIT to increase 30-40% versus 33.1% growth reported in first-quarter fiscal 2023.
What Our Model Indicates
Our proven model predicts an earnings beat for RPM International this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is exactly the case here, as you will see below.
Earnings ESP: Its earnings ESP is +0.91%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
According to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Acuity Brands, Inc. (AYI - Free Report) has an Earnings ESP of +7.71% and a Zacks Rank #3.
AYI’s earnings topped the consensus mark in all the last four quarters, with the average being surprise being 16.9%. Earnings for the to-be-reported quarter are expected to decline 1.1% year over year.
Fluor Corporation (FLR - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #3.
FLR’s earnings topped the consensus mark in one of the trailing four quarters and missed on other three occasions, with the average negative surprise being 38.2%. Earnings for the to-be-reported quarter are expected to grow 64.5% year over year.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank #3.
PWR’s earnings topped the consensus mark in three of the last four quarters and met on one occasion, with the average being 5.9%. Earnings for the to-be-reported quarter are expected to grow 4.6% year over year.
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RPM International (RPM) to Post Q2 Earnings: What's in Store?
RPM International Inc. (RPM - Free Report) is slated to report second-quarter fiscal 2023 results (ended Nov 30) on Jan 5, before the opening bell.
In the last-reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 12.2% and 2.3%, respectively. On a year-over-year basis, earnings and net sales increased 36.1% and 17.1%, respectively.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at $1.10 per share over the past 60 days. The estimated value indicates a 39.2% increase from the year-ago earnings of 79 cents per share. The consensus mark for revenues is $1.81 billion, suggesting a 10.3% year-over-year improvement.
RPM International Inc. Price and EPS Surprise
RPM International Inc. price-eps-surprise | RPM International Inc. Quote
Factors to Consider
RPM’s fiscal second-quarter earnings and revenues are likely to have increased from the prior year’s levels on prudent cost management and solid pricing. Increased public sector spending, its turn-key service model and its focus on renovations are likely to have aided the company’s top line in the quarter.
For second-quarter fiscal 2023, RPM International expects sales to increase 9-12% year over year. The company expects sales growth at Construction Products Group or CPG in the high-single-digit as commercial and infrastructure construction activity is likely to remain positive and pricing management will contribute to growth, partially offset by macroeconomic weakness in Europe.
Performance Coatings Group or PCG sales are anticipated to increase in the high-single-digit to low-double-digit, driven by strength in energy markets, reshoring manufacturing to the United States and government infrastructure spending.
Specialty Products Group or SPG revenue is expected to be up in the high-single-digit, benefiting from continued strength in food coatings and additives. The Consumer Group or CG sales are likely to be up in the teen as a result of improved material supply, pricing management and a favorable comparison to the second quarter of fiscal 2022, when sales were depressed by alkyd resin shortages from an explosion at a supplier’s plant.
The Zacks Consensus Estimate for CPG net sales of $646 million suggests an 11.5% decrease from the previous quarter. The same for PCG sales are likely to decline 5.6% to $321 million from the previous quarter.
The consensus estimate for CG net sales of $555 million suggests a 4.9% increase from a year ago but a decline of 15.8% sequentially. The same for SPG sales are likely to increase 2.1% to $198 million from a year ago but a 2.5% sequential decline.
RPM intends to increase prices for certain raw materials, labor and packaging to forgo unprecedented supply-chain and inflationary woes. Higher costs from unreliable bulk transportation (which creates production inefficiencies) and fuel surcharges (driven by high energy prices) are expected to have affected the CG segment. Also, a strengthening U.S. dollar remains a headwind for the fiscal second quarter.
RPM anticipates the fiscal second quarter’s adjusted EBIT to increase 30-40% versus 33.1% growth reported in first-quarter fiscal 2023.
What Our Model Indicates
Our proven model predicts an earnings beat for RPM International this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is exactly the case here, as you will see below.
Earnings ESP: Its earnings ESP is +0.91%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks With Favorable Combination
According to our model, here are some companies in the broader construction sector that have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Acuity Brands, Inc. (AYI - Free Report) has an Earnings ESP of +7.71% and a Zacks Rank #3.
AYI’s earnings topped the consensus mark in all the last four quarters, with the average being surprise being 16.9%. Earnings for the to-be-reported quarter are expected to decline 1.1% year over year.
Fluor Corporation (FLR - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #3.
FLR’s earnings topped the consensus mark in one of the trailing four quarters and missed on other three occasions, with the average negative surprise being 38.2%. Earnings for the to-be-reported quarter are expected to grow 64.5% year over year.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +0.73% and a Zacks Rank #3.
PWR’s earnings topped the consensus mark in three of the last four quarters and met on one occasion, with the average being 5.9%. Earnings for the to-be-reported quarter are expected to grow 4.6% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.