Investment Value Analysis of RPM International: Earnings Miss Expectations but Institutions Still Upgrade Ratings

Based on my in-depth research, an important clarification is needed regarding RPM International’s stock:

—from $121 to $132, and simultaneously upgraded its rating from “Neutral” to “Outperform”[1]. Below is a detailed analysis of driving factors and investment value assessment:

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RPM International released its Q2 FY2026 earnings report on January 8, 2026[2][3]:

Metric	Actual	Consensus Estimate	Deviation
Revenue	$1.91B	$1.93B	-1.0%
Adjusted EPS	$1.20	$1.41-$1.43	-15%
Adjusted EBIT	$227M	-	-11.2%

While revenue hit a record high with a 3.5% year-over-year increase, profitability declined significantly, and the substantial EPS miss caused the stock price to drop 4.6% in pre-market trading on the same day[2].

• Impact of Government Shutdown
  : The prolonged U.S. government shutdown caused delays in construction projects, directly impacting demand for the company’s industrial coatings and construction products[2][3]
• Weak Consumer Confidence
  : Slowing consumer demand has impacted the performance of the consumer products segment
• Inflationary Pressures
  : Sustained cost pressures have squeezed profit margins

• Slowing organic sales growth
• Rising SG&A expenses eroding profit margins
• Transitional impacts from business restructuring (adjusted from 4 reportable segments to 3)

• Strong Cash Flow
  : Operating cash flow reached $346M, the second-highest in history, with a year-over-year increase of $66M[2]
• December Sales Rebound
  : Monthly sales grew 12.1% with volume up 7%, indicating signs of demand recovery[2]
• Healthy Balance Sheet
  : Current ratio of 2.22, net debt decreased by $127M[2]
• Sustained Shareholder Returns
  : Has increased dividends for 52 consecutive years, returned $169M to shareholders via dividends and share buybacks in this quarter[2]

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Assessment Dimension	Metric	Evaluation
Profitability	ROE 22.70%, Net Profit Margin 8.79%	Excellent
Liquidity	Current Ratio 2.22, Quick Ratio 1.45	Stable
Debt Risk	Debt-to-Equity Ratio 0.99	Moderate
Valuation	P/E 20.34x, P/B 4.33x	Slightly Above Fair Value

Indicator	Value	Signal Interpretation
Current Price	$106.61	14.4% below consensus target price
52-Week Range	$95.28 - $129.12	In the lower-mid range
RSI(14)	44.63	Neutral-weak, not oversold
200-Day Moving Average (MA200)	$112.66	Current price below the annual moving average
1-Year Price Change	-10.61%	Underperformed the broader market

: The stock price is in a sideways consolidation pattern, with a reference trading range of [$105.28, $107.94]. The MACD and KDJ indicators show a short-term bullish tilt but lack clear trend signals.

Rating Distribution	Number	Percentage
Buy	13	59.1%
Hold	9	40.9%
Consensus Target Price	$122.00	Implied upside of 14.4%

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• Macroeconomic recovery driving demand rebound in construction and manufacturing sectors
• Cost optimization measures take effect to improve profit margins
• Sustained sales rebound trend from December
• Sustained growth in high-performance construction and infrastructure sectors

• Persistent macroeconomic uncertainty
• Slow recovery of consumer confidence
• Fluctuations in raw material costs
• Rising interest rates increasing debt costs

Assessment Item	Conclusion
Valuation Rationality	P/E of 20.3x is slightly above the historical average, and the stock price has reflected recent weak performance
Growth Prospects	Renovation and infrastructure demand provide long-term growth support
Dividend Returns	Has increased dividends for 52 consecutive years, with an attractive dividend yield
Market Sentiment	Analysts maintain a mostly positive rating, and the stock price is near the bottom of its range

: As a leading enterprise in the specialty chemicals and coatings industry, RPM International’s current stock price has fully priced in the negative impact of the earnings miss. Considering its stable balance sheet, strong cash flow generation capability, and sustained shareholder return policy, it has at the current valuation level. It is recommended to pay attention to the next earnings report to be released in April 2026[0] to verify the business recovery trend.

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[1] Yahoo Finance - Synopsys upgraded, Warner Bros. downgraded (https://finance.yahoo.com/news/synopsys-upgraded-warner-bros-downgraded-144109609.html)

[2] Investing.com - RPM Q2 2026 slides: Revenue grows 3.5% while margins face pressure (https://www.investing.com/news/company-news/rpm-q2-2026-slides-revenue-grows-35-while-margins-face-pressure-93CH-4437815)

[3] GuruFocus - RPM Misses Revenue Expectations Amid Challenging Quarter (https://www.gurufocus.com/news/4101414/rpm-misses-revenue-expectations-amid-challenging-quarter)

[4] QuiverQuant - RPM INTERNATIONAL Q2 2026 Earnings Results (https://www.quiverquant.com/news/RPM+INTERNATIONAL+(%24RPM)+Q2+2026+Earnings+Results)

[0] Jinling API Data