Investing.com -- RBC Capital Markets upgraded RPM International to outperform, saying the stock has likely found a floor and stands to benefit from infrastructure demand, stepped-up sales investments and a cheaper valuation after a pullback.
Weak DIY trends have weighed on sentiment, but RPM’s exposure to non-residential construction should support growth ahead of coatings peers.
It estimates more than 20% of the company’s business ties to infrastructure through its performance and construction units, slightly above major paint makers that are more dependent on consumer-facing markets. Forecasts from the American Institute of Architects point to steady gains in commercial spending in 2025 and 2026, including data centers, offices and institutional projects.
RBC said RPM has been investing in sales staff and advertising to win larger accounts, which has dampened near-term margins.
The firm highlighted an extra $5.3 million in employee spending and $3.2 million in advertising in the latest quarter. It cut its second quarter EBITDA and EPS estimates to $315 million and $1.42 to reflect about $10 million of growth-related SG&A, but raised its 2027 forecasts on expectations that stronger construction activity and the company’s commercial push will support results.
The firm said M&A will remain important for RPM’s growth, noting a mix of inorganic and organic contributions across its consumer, performance and construction segments.
With leverage at about 2 times EBITDA, RBC said the company has room for continued bolt-on deals. It expects the stock’s multiple to recover as organic growth improves and pointed to a current valuation of 12.2x and 11.4x FY26 and FY27 EBITDA, below its long-term range and in line with coatings peers.
RBC lifted its price target to $132 from $121 and said RPM’s roughly 10% slide since its first quarter results creates an entry point as infrastructure demand, SG&A leverage and capital deployment support a recovery through 2026 and 2027.
