Have you evaluated the performance of RPM International's (RPM) international operations during the quarter that concluded in February 2025? Considering the extensive worldwide presence of this specialty chemicals company, analyzing the patterns in international revenues is crucial for understanding its financial resilience and potential for growth.
In the current global economy, which is more interconnected than ever, a company's success in penetrating international markets is crucial for its financial health and growth journey. Investors must understand a company's dependence on overseas markets, as this offers a window into the company's earnings stability, its ability to benefit from varied economic cycles and its potential for long-term growth.
International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.
While analyzing RPM's performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.
The company's total revenue for the quarter stood at $1.48 billion, declining 3.1% year over year. Now, let's delve into RPM's international revenue breakdown to gain insights into the significance of its operations beyond home turf.
A Look into RPM's International Revenue Streams
Latin America accounted for 4.50% of the company's total revenue during the quarter, translating to $66.44 million. Revenues from this region represented a surprise of +3.91%, with Wall Street analysts collectively expecting $63.94 million. When compared to the preceding quarter and the same quarter in the previous year, Latin America contributed $77 million (4.17%) and $77.09 million (5.06%) to the total revenue, respectively.
Of the total revenue, $224.29 million came from Europe during the last fiscal quarter, accounting for 15.19%. This represented a surprise of +6.18% as analysts had expected the region to contribute $211.24 million to the total revenue. In comparison, the region contributed $266.96 million, or 14.47%, and $227.03 million, or 14.91%, to total revenue in the previous and year-ago quarters, respectively.
During the quarter, Canada contributed $87.1 million in revenue, making up 5.90% of the total revenue. When compared to the consensus estimate of $107.81 million, this meant a surprise of -19.21%. Looking back, Canada contributed $136.06 million, or 7.37%, in the previous quarter, and $95.26 million, or 6.25%, in the same quarter of the previous year.
Asia Pacific generated $37.72 million in revenues for the company in the last quarter, constituting 2.55% of the total. This represented a surprise of +7.8% compared to the $34.99 million projected by Wall Street analysts. Comparatively, in the previous quarter, Asia Pacific accounted for $44.45 million (2.41%), and in the year-ago quarter, it contributed $41.58 million (2.73%) to the total revenue.
Other Foreign generated $24.42 million in revenues for the company in the last quarter, constituting 1.65% of the total. This represented a surprise of +8.25% compared to the $22.56 million projected by Wall Street analysts. Comparatively, in the previous quarter, Other Foreign accounted for $30.35 million (1.64%), and in the year-ago quarter, it contributed $24.61 million (1.62%) to the total revenue.
Revenue Projections for Overseas Markets
The current fiscal quarter's total revenue for RPM International, as projected by Wall Street analysts, is expected to reach $2.01 billion, reflecting an increase of 0.1% from the same quarter last year. The breakdown of this revenue by foreign region is as follows: Latin America is anticipated to contribute 4.1% or $83.01 million, Europe 14.1% or $283.05 million, Canada 7.5% or $151.02 million, Asia Pacific 2.3% or $45.61 million and Other Foreign 1.5% or $30.12 million.
For the entire year, the company's total revenue is forecasted to be $7.3 billion, which is a reduction of 0.5% from the previous year. The revenue contributions from different regions are expected as follows: Latin America will contribute 4.1% ($298.42 million), Europe 13.9% ($1.02 billion), Canada 7.4% ($542.08 million), Asia Pacific 2.3% ($164.44 million) and Other Foreign 1.5% ($110.52 million) to the total revenue.
Concluding Remarks
The dependency of RPM International on global markets for its revenues presents a mix of potential gains and hazards. Thus, monitoring the trends in its overseas revenues can be a key indicator for predicting the firm's future performance.
With the increasing intricacies of global interdependence and geopolitical strife, Wall Street analysts meticulously observe these patterns, especially for companies with an international footprint, to tweak their forecasts of earnings. Importantly, several additional factors, such as a company's domestic market status, also impact these earnings forecasts.
We at Zacks strongly focus on the dynamic earnings forecast of companies, given that empirical studies have demonstrated its potent impact on the immediate price movement of stocks. Invariably, there's a positive relationship -- upward earnings predictions often result in an increase in stock prices.
The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.
Currently, RPM International holds a Zacks Rank #4 (Sell), signifying its potential to underperform the overall market's performance in the forthcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
The stock has increased by 7.9% over the past month compared to the 9.1% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Basic Materials sector, which includes RPM International, has increased 5% during this time frame. Over the past three months, the company's shares have experienced a loss of 7.4% relative to the S&P 500's 3.1% decline. Throughout this period, the sector overall has witnessed a 2.2% decrease.
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