2Q18 EPS Beats; Raising Estimates on the New U.S. Tax Law
- 2Q18 (Nov) adjusted EPS were 70 cents (vs 52 cents last year), 12 cents higher than our estimate, or 3 cents above when adjusting for a non-recurring tax benefit of 9 cents, on better-than-anticipated sales;
- Our FY18 EPS estimate is now $3.05 (from $2.93), up 24% from FY17 (or 20% when adjusting for non-recurring expenses in FY17), aided by the 2Q18 outperformance and the new U.S. tax law expected to add around 10 cents to EPS for the fiscal year;
- Our FY19 EPS estimate is now $3.40 (from $3.30), again helped by lower U.S. taxes, up 12% from our FY18 projection.
RPM International manufactures, markets and sells various chemical product lines, including paints, infrastructure rehab and repair products, protective coatings, roofing systems, sealants and adhesives. The company's segments include: industrial, which includes maintenance and protection products and services for roofing and waterproofing systems; specialty, which includes industrial cleaners, restoration services equipment, colorants, exterior finishes, edible coatings and other coatings; and consumer, which includes rust-preventative, special purpose and decorative paints, caulks, sealants, primers, nail enamels, cement cleaners, floor sealers and woodcare coatings and other consumer products.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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