- Investors may be wondering whether RPM International is priced attractively right now, or if the market is missing something in its value story.
- The share price closed at US$102.05, with a 6.3% decline over 7 days, a 12.7% decline over 30 days and a 1.6% decline year to date, while the 1 year return sits at an 11.7% decline and the 3 and 5 year returns are 24.9% and 26.9% respectively.
- These recent moves come as investors continue to reassess established materials names like RPM International and what they might be worth over a longer holding period. With no single headline driving the price on its own, it puts even more focus on whether the current valuation lines up with the business fundamentals.
- Against that backdrop, RPM International currently has a valuation check score of 6 out of 6. Next we will look at how different valuation methods line up on the stock, before finishing with a way to think about value that goes beyond just the numbers.
Find out why RPM International's -11.7% return over the last year is lagging behind its peers.
Approach 1: RPM International Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes estimates of a company’s future cash flows and then discounts them back to today using a required rate of return to arrive at an estimate of what the business might be worth right now.
For RPM International, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $586.6 million. Based on analyst inputs for the early years and Simply Wall St extrapolations after that, free cash flow is projected to reach $1,239.6 million in 2035, with intermediate points such as $636.5 million in 2026 and $833.5 million in 2028.
When those projected cash flows are discounted back, the DCF model suggests an intrinsic value of about $160.56 per share. Compared with the recent share price of $102.05, that implies the stock is around 36.4% undervalued on this set of assumptions.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests RPM International is undervalued by 36.4%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: RPM International Price vs Earnings
For a profitable company like RPM International, the P/E ratio is a straightforward way to compare what you are paying for each dollar of current earnings. Investors usually accept a higher P/E if they expect stronger growth or see lower risk, and look for a lower P/E when growth expectations are more modest or risks are higher.
RPM International is trading on a P/E of 19.68x. That sits below the Chemicals industry average of 25.77x and also below the broader peer group average of 31.22x. Simply Wall St also calculates a proprietary “Fair Ratio” of 21.62x for RPM International, which is the P/E level they would expect given factors such as the company’s earnings growth profile, profit margins, market cap, risks and its position within the Chemicals industry.
This Fair Ratio is more tailored than a simple comparison with peers or the sector, because it adjusts for company specific characteristics rather than assuming all Chemicals stocks deserve the same multiple. Setting the current 19.68x P/E against the 21.62x Fair Ratio points to RPM International trading below that customised benchmark.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your RPM International Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives, where you write the story you believe about RPM International, link that story to specific forecasts for revenue, earnings and margins, and then see a fair value that updates automatically as new news or earnings arrive. You can then compare this with the current price to judge whether it looks attractive or stretched, and even set your own view anywhere between the more cautious fair value around US$94 and the more optimistic fair value around US$145 that other RPM International investors are already using on the Community page.
Do you think there's more to the story for RPM International? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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