Is RPM International Still Worth Buying on Recent 52-Week High?

RPM International Inc.’s RPM stock has gained 22.7% in the past three months, strongly outperforming the Zacks Construction sector’s 10.3% growth and S&P 500 index’s 7.1% rally.RPM well captured the attention of investors recently after President-elect Donald Trump pledged to impose new tariffs on imports from Canada, Mexico and China. The stock touched a new 52-week high of $141.79 in Monday’s trading session.Image Source: Zacks Investment ResearchOther stocks like Quanta Services, Inc. PWR, Owens Corning OC and UFP Industries, Inc. UFPI also reached their 52-week on Monday.This Medina, OH-based specialty chemicals manufacturer is capitalizing on increased infrastructure demand and focusing on the repair and maintenance business. RPM continues implementing its MAP 2025 operational improvement initiatives while leveraging its broad product portfolio.The company is adapting to challenging economic conditions by targeting growing end markets, improving operational efficiency and investing in strategic growth initiatives. As it moves into fiscal 2025, RPM expects to further benefit from MAP 2025 and achieve additional margin expansion.Let’s check out whether the stock is a good buy now or if the rally has run its course.RPM’s Efficient Execution of MAP 2025 InitiativesRPM continues to make solid progress with its MAP 2025 initiative, unveiled in August 2022, to maximize operational efficiencies and enhance value for stakeholders through 2025.The company achieved record-high adjusted earnings and EBIT in the first quarter of fiscal 2025 and remains on track to achieve $465 million in total cost savings by May 2025, including $185 million in annualized benefits. RPM aims to deliver a 16% adjusted EBIT margin and a 42% gross profit margin by the program's completion, underscoring the success of its efficiency-driven approach.Leveraging Infrastructure Demand for GrowthRPM is capitalizing on rising global infrastructure demand, bolstering growth in its Construction Products Group (CPG) and Performance Coatings Group (PCG). By targeting repair, maintenance, and new construction markets, the company has maintained strong operational performance. A key focus on data center construction has positioned RPM as a leader in high-performance building solutions, aligning its offerings with rapidly growing markets.Optimistic Views for RPM in Fiscal 2025Backed by its enhanced procurement teams and the implementation of CS-168, RPM anticipates a positive outlook for fiscal 2025. In the CPG, RPM expects to outperform market growth through its differentiated product and service offerings. It is set to benefit from increased spending on infrastructure, high-performance buildings and restoration projects, even as office construction remains sluggish.With the PCG, RPM continues to capitalize on rising investments in infrastructure projects and high-performance buildings. While spending on reshoring projects may moderate in some sectors, such as battery plants, the company anticipates expansion in areas like data centers and pharmaceutical manufacturing, contributing to overall growth in fiscal 2025.Strong Cash Flow & Efficient Capital AllocationSustained cash flow momentum has enabled RPM International to significantly reduce debt and deliver shareholder returns in fiscal 2025. In the fiscal first quarter, the company repaid $75 million in debt, contributing to a total reduction of $453 million over the past year. This debt reduction, coupled with EBIT growth, drove a 12.2% increase in adjusted earnings per share (EPS) to a record $1.84. RPM is also advancing long-term growth initiatives, including the upcoming launch of a new production facility in Belgium to enhance its procurement capabilities.RPM’s Premium Valuation Worth Paying on Solid ReturnsRPM’s trailing 12-month return on equity is better than the overall construction sector’s average, as shown in the chart below. This depicts the company is more efficient at generating profits from its shareholders' investments than its competitors.Image Source: Zacks Investment ResearchRPM stock is currently slightly overvalued compared to the construction sector, as shown in the chart below.Image Source: Zacks Investment ResearchRPM Stock’s Estimate Movement Trending UpwardDespite premium valuation, analysts are showing confidence in the stock, as indicated below by recent upward revisions in EPS estimates for fiscal 2025. The estimated figures for fiscal 2025 indicate 12.6% year-over-year growth. The stock also flaunts a VGM Score of B.Image Source: Zacks Investment ResearchHow to Play RPM Stock?RPM remains a compelling investment in the specialty chemicals sector. The company is effectively capitalizing on increased infrastructure demand while focusing on repair and maintenance. This Zacks Rank #2 (Buy) company demonstrates the potential for continued growth. The company's strategic investments in high-demand markets, such as data center construction, position it well for continued success. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Although RPM has lowered its sales expectations for the year due to demand softness in DIY and specialty OEM markets, it still anticipates continued growth across its portfolio. Meanwhile, its MAP 2025 initiatives will overcome industrial headwinds like labor inflation and supply chain disruptions, as well as costs and expenses related to restructuring, divestitures, and acquisitions.The stock’s premium valuation makes it more suitable for long-term investors who believe in the company’s ability to execute its growth strategy.RPM's dedication to shareholder value through disciplined capital allocation and effective debt management highlights its long-term growth potential. It remains an attractive investment and still offers a compelling investment opportunity for Growth-driven stocks.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quanta Services, Inc. (PWR): Free Stock Analysis Report UFP Industries, Inc. (UFPI): Free Stock Analysis Report Owens Corning Inc (OC): Free Stock Analysis Report RPM International Inc. (RPM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks