RPM - Embedded Expectations Analysis - 2018 08 14
RPM International Inc. (RPM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 17.6x Uniform P/E. At these levels, the market has somewhat bearish expectations for the firm, while management has concerns about the effectiveness of their cost-cutting initiatives and their competitive advantagesSpecifically, management may have concerns about the potential of their operating costs initiatives translating into actual results, particularly within SG&A. Additionally, they may be overstating the competitive advantage they possess because of their decentralized business structure, and the innovation quality and market share of their Rust-Oleum line. Moreover, they may have concerns about mix issues in their specialty segment, and slowing organic sales growth in their industrials segment. Finally, management may lack confidence in their ability to return capital to shareholders
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.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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