RPM International Inc. (RPM): what the price requires

At today's price, RPM International Inc. (RPM) is priced for +18.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/RPM

Headline

FieldValue
TickerRPM
CompanyRPM International Inc.
Current price$102.19/sh
CompositionCPG (Construction Products Group) 38% / PCG (Performance Coatings Group) 20% / Consumer 33% / SPG (Specialty Products Group) 9%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed7.6%
Operating margin today8.7%
Margin compression implied-1.1pp
Implied growth18.0%
Multiple paid25x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.7pp.

How unusual the bet is: high

ReferenceValue
vs own history+3.22σ
cohort percentile (of 76 peers)78
sustained it ~5 years at this level46%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.54x4expensive
Earnings1.97x4expensive
Relative2.04x4expensive
Growth1.12x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$91.371.12xyesFCF base $0.6B, growth 6% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection
DCF Exit MultipleGrowth$97.941.04xyesExit EV/EBITDA: 252.3x / 254.3x / 256.3x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$42.042.43xyesP/E 14x (static sector reference · 2026-04), scenarios: 11.7x / 14.0x / 16.3x (bear / base = reference held flat / bull), EV/EBITDA 17.6x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$56.461.81xyesBV/sh $24.68, ROE (TTM) 21.2%, ke 9.3%
Two-Stage Excess ReturnAsset$84.741.21xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$77.901.31xyesRev $7.7B, growth 6% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.7x / 2.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$62.281.64xyesEPS $5.19, growth 4% (input: historical EPS growth), PEG=5.42 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$80.581.27xyesBV $24.68 + 5yr PV of (ROE (TTM) 21.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$53.681.90xyes√(22.5 × EPS $5.19 × BVPS $24.68) — Graham's conservative floor
EV/EBITDA RelativeRelative$2.7836.76xyesEBITDA $0.05B × sector EV/EBITDA 8.0x (excluded from median)
FCF YieldEarnings$48.322.11xyesFCF $575.2M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$45.782.23xyesSBC-adj FCF $0.55B (FCF $0.58B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$68.391.49xyesEPS $5.19 × (8.5 + 2×3.6%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$90.741.13xyesRevenue $7.71B × sector P/S 1.5x
PEG Fair ValueRelative$28.123.63xyesEPS $5.19 × (PEG 1.5 × growth 3.6% (input: historical EPS growth)) → PE 5.4x
Earnings YieldEarnings$56.111.82xyesEPS $5.19 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.3b
Net debt / NOPAT (after-tax)4.89x
Net debt / operating income (pre-tax)3.64x
Interest coverage5.8x
Share count CAGR (buyback)-0.4%
Burning cashno

Bullet Takeaways

Bull Case

What the market is paying for at RPM is the margin story, not the revenue story, and the recent prints are validating it. Q3 FY2026 sales grew a respectable 8.9% to $1.61 billion, but the headline was profit: gross margin expanded about 110 basis points on pricing and the MAP 2025 cost program, and adjusted EBIT rose 48.8% year over year to $116.4 million. Single-digit sales growth turning into a near-50% jump in operating profit is the operating leverage the price is betting continues.

The businesses underneath are durable in a quiet, unglamorous way. RPM owns category-leading brands in repair and maintenance niches: the construction segment supplies "construction sealants and adhesives, coatings and chemicals, roofing systems, concrete admixture and repair products, building envelope solutions", and the consumer segment serves "the home improvement market with products designed for niche architectural, rust-preventative, decorative and special purpose paint and caulking and sealing applications". These are products bought when something needs fixing, not only when something new gets built, which makes the revenue more resilient than a pure-construction read would suggest. A 21% return on equity on that base is the evidence the brands carry pricing power.

The demand backdrop management names is the kind that runs for years. The company points to repair-and-maintenance markets, high-performance and energy-saving building solutions, and a solid pipeline of construction projects as the supports for its outlook. Layer the self-help margin program on top of that demand and the bull case is straightforward: even modest volume growth, multiplied by the cost savings still flowing through, keeps lifting earnings. RPM reaffirmed its fiscal 2026 fourth-quarter outlook for mid-single-digit sales growth and low- to high-single-digit adjusted EBIT growth, which says the margin momentum is expected to carry.

Bear Case

Look at how RPM grows and the bear case comes into focus. Management is explicit that acquisitions are central, stating it intends to "continue pursuing acquisitions of complementary businesses or products and creating joint ventures" and that its growth depends on the ability to identify, negotiate, and finance them. A company that funds growth through deal-making is making a capital-allocation bet on every transaction, and the risk is not one bad quarter; it is overpaying for the next bolt-on or stumbling on integration, with the cost showing up as goodwill that has to keep earning its place.

The leverage is the constraint on that strategy. Net debt is about $2.26 billion, roughly 3.6 times operating income, with interest covered about 5.6 times. That is serviceable, but it is the same balance sheet that funds the acquisitions, so a tighter credit window slows the growth engine at the moment organic demand would need to do more. The share count has barely moved, down about 0.4% a year, so unlike a true buyback compounder, holders are not getting a meaningful per-share tailwind from capital return; the equity story rests almost entirely on operating execution and deals.

And the price has priced the execution as if it persists. The market is paying for operating growth held at its self-funding ceiling for roughly six years in the segment carrying the premium, against a backdrop where the asset-value, earnings-power, and peer-multiple methods all read the price as rich, several landing well below it. Much of the recent earnings surge came from a cost program, MAP 2025, that is by its nature finite; cost savings can be banked once. When the program laps and the comparisons get harder, the margin tailwind fades, and a company described by its own filing as exposed to "global and regional markets and general economic conditions" and raw-material and capital-availability risk has to grow into a multiple set during the easy part of the cycle.

Valuation

The price decomposes onto a single segment doing the heavy lifting. The Consumer segment is the one carrying the priced-in premium, and at today's price the market is paying for operating growth held at its self-funding ceiling for roughly six years there. Only about three in ten comparable fast-growers have sustained that pace even six years, so the read is elevated, a durability bet on a part of the business rather than a claim that the whole company compounds fast.

The methods line up the way they do for a quality industrial trading on a premium. The asset-value, earnings-power, and peer-multiple families all read the price as expensive, several landing well below it; the peer-multiple lens, for instance, blends toward a sector multiple near 14 times against a richer trailing figure. Only the forward-growth methods reach the price, and they reach it by crediting continued compounding the static frames cannot see. The earnings underneath are real, EPS of $5.19 on a 21% return on equity, but the spread between the value methods and the price is the premium the market is paying for the margin program and the demand pipeline to keep delivering.

Solvency is the discipline check, not the worry. Net debt of about $2.26 billion is roughly 3.6 times operating income with interest covered about 5.6 times, which is comfortable for a steady cash generator but tight enough that the acquisition strategy depends on the credit window staying open. The decisive question for the valuation is durability of margin: the recent earnings strength leaned heavily on the MAP 2025 cost savings, and the price assumes that operating profit keeps climbing after the easy cost wins are banked.

Catalysts

The recent earnings cadence has been a margin story. RPM reported record fiscal 2026 third-quarter sales of $1.61 billion, up 8.9%, with diluted EPS of $0.40 and net income of $51.4 million; on an adjusted basis, EBIT rose 48.8% to a record $116.4 million and adjusted diluted EPS rose 62.9% to $0.57. The gap between single-digit sales growth and a roughly 50% adjusted operating-profit jump is the operating leverage from the MAP 2025 cost program, with gross margin up about 110 basis points on pricing and fixed-cost benefits.

Management reaffirmed its fiscal 2026 fourth-quarter outlook for mid-single-digit sales growth and low- to high-single-digit adjusted EBIT growth, citing SG&A optimization, pricing to recover inflation, demand for high-performance and energy-saving building solutions, resilient repair-and-maintenance markets, and a solid construction pipeline. The reaffirmation signals the margin program is expected to keep contributing into the close of the year.

The two things to watch are whether the cost-driven margin expansion sustains once the easy savings are banked, and whether the acquisition pipeline keeps adding earnings without straining the balance sheet. The next quarterly print and any sizable acquisition announcement are the events that move the story from here.

Peer Cohorts (Per Segment, With Filing Citations)

CPG (Construction Products Group) (reported)

PCG (Performance Coatings Group) (reported)

Consumer (reported)

SPG (Specialty Products Group) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

RPM Q3 FY2026 earnings release, April 2026

View the full interactive RPM report on boothcheck