Hot Stock to watch: RPM International Inc. (NYSE: RPM)

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RPM International Inc. (NYSE: RPM), largest suppliers especially coatings and building materials, stock rose 3.71% on April 9th, 2020 (Source: Google finance) after the company reported decent estimates for the third quarter of FY 20. Currently, about all of the North American plants are operational, with a few exceptions, while a number of the international plants have been closed due to government mandates. A large number of the company’s North American customers such as those in construction, infrastructure and DIY home and hardware retail are also considered essential and are currently remain open for business. During the third quarter and early in the fourth quarter, the company had announced the closure of two additional plants, which brings the total to 20 out of a 31 plants that were originally targeted for closure at the beginning of the MAP to Growth program. On a consolidated basis, compared to the last year, the company has realized incremental MAP to Growth savings in the third quarter of aggregate $21 million out of which $5 million came from manufacturing, $12 million from procurement and $4 million from SG&A. Overall, the company has reported third-quarter net income of $11.9 million, compared to the $14.2 million reported in the year-ago period. At the end of February 2020, the company’s total liquidity, including cash and committed revolving credit facilities stood at $1.1 billion.

RPM in the third quarter of FY 20 has reported 76.9 percent increase in the adjusted earnings per share of 23 cents, beating the analysts’ estimates for the adjusted earnings per share of 20 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 2.9 percent to $1.17 billion in the third quarter of FY 20, missing the analysts’ estimates for revenue of $1.18 billion. Organic sales grew by 3% or $34.0 million during the quarter. The acquisitions have contributed 0.7% to sales, while foreign exchange was a headwind that has decreased the sales by 0.8%. This is a strong top-line growth during the third quarter which typically generates the most modest results each year because it falls during the winter months when painting and construction activity slow. The consolidated adjusted earnings before interest and taxes, EBIT, has increased 30.4% to $60.5 million compared to $46.4 million reported in the fiscal 2019 third quarter.

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