Why Is RPM International (RPM) Down 6.5% Since Last Earnings Report?

Core Viewpoint - RPM International reported strong first-quarter fiscal 2025 results, with earnings and net sales exceeding expectations and showing year-over-year growth [3][4]. Financial Performance - Adjusted EPS was $1.88, surpassing the Zacks Consensus Estimate of $1.87 by 0.5%, and increased from $1.84 in the same quarter last year [4]. - Net sales reached $2.11 billion, beating the consensus mark of $2.04 billion by 3.4% and reflecting a 7.4% year-over-year increase [4]. Geographic Sales Breakdown - North America sales rose 5.9%, contributing approximately 79% of total sales, driven by high-performance building solutions [5]. - European sales increased by 20.7%, accounting for 15% of total sales, aided by mergers and acquisitions as well as favorable foreign exchange [5]. - Sales in Africa and the Middle East grew by 9.2%, while Asia Pacific saw a slight increase of 0.1% [5]. - Conversely, Latin America sales declined by 4.8% year over year [6]. Operational Insights - Selling, general and administrative expenses as a percentage of net sales increased by 40 basis points to 27.1% [7]. - Adjusted EBIT rose 2.9% year over year to $337.8 million, with an adjusted EBIT margin contracting by 70 basis points to 16% [7]. Segment Performance - Construction Products Group sales increased by 6.3% to $809.9 million, with adjusted EBIT up 3.1% to $169.1 million [8]. - Performance Coatings Group sales grew by 9.9% to $538.5 million, with adjusted EBIT rising 11% to $87 million [9]. - Consumer Group sales increased by 6.6% to $693.8 million, with adjusted EBIT up 2.9% to $119.9 million [10][11]. Balance Sheet Overview - Total liquidity at the end of the fiscal first quarter 2026 was $933.4 million, down from $969.1 million at the end of fiscal 2025 [12]. - Long-term debt stood at $2.66 billion, slightly up from $2.64 billion at the end of fiscal 2025 [12]. Future Outlook - RPM International anticipates continued growth in Q2 fiscal 2026, supported by non-residential construction markets and growth investments [13]. - The company expects consolidated sales and adjusted EBIT to increase in the mid-single-digit range compared to the prior year [13]. - For fiscal 2026, RPM plans to enhance growth investments, expecting record levels for both sales and adjusted EBIT [14]. Estimate Trends - Recent estimates for RPM International have shown a downward trend, indicating a potential shift in investor sentiment [15][17]. VGM Scores - RPM International currently holds an average Growth Score of C, a Momentum Score of D, and a Value Score of C, placing it in the middle 20% for value investors [16].