RPM Stock Has One Thing Left To Prove
RPM International (RPM) lowered its profit growth outlook for fiscal 2027 on October 6, 2026. Executives attributed the revision partly to a slowdown in the company’s largest business, which supplies roofing and construction products. Demand from school and healthcare customers has cooled off. Management expects a rebound, but the slowdown has not ended yet.
Where Is RPM’s School And Healthcare Slowdown Showing Up?
Executives noted that the school slowdown comes partly from funding at local and state levels, and they called the healthcare slowdown temporary. Both sectors are end markets for RPM’s Construction Products Group. Analysts pressed for details about both markets on the fiscal Q1 2027 earnings call. The group’s sales rose in fiscal Q1 2027, lifted by the Kalzip acquisition. However, its organic sales, which exclude acquisitions, declined.
Management noted that the slowdown is sharpest in roofing, and the group’s backlog is shrinking primarily in that area. A backlog represents work that customers have ordered that has not been done yet. Consequently, a smaller backlog today points to fewer sales later.
Construction Products Is RPM’s Largest Segment
The Construction Products Group generated $3.1 billion in fiscal 2026, representing 39% of RPM’s revenue that year. Its sales grew 6.8% from fiscal 2025. Together, schools and healthcare make up over a quarter of the group’s end market exposure, according to management.
This weakness sits inside RPM’s biggest business, and the company has already lowered its forecast. RPM now expects adjusted EBITDA, a measure of operating profit before depreciation, to grow at a mid-single-digit rate in fiscal 2027. The earlier outlook called for growth of 5% to 10%. Construction products are one reason for the lower outlook, but not the only one. Management also raised its estimate for raw material inflation.
When Does RPM Management Expect A Recovery?
Executives expect the Construction Products Group to return to organic growth toward the end of fiscal 2027. That timeline is tied to how the roofing business works. If orders do not arrive this fall, management explained, the work will not show up until next spring. They added that school funding is starting to free up.
Management has also described its full-year outlook as a bet on when that recovery arrives. Management anticipates a rebound in the spring months, but RPM must rebuild its backlog first. The key indicator will be executive commentary on the group’s backlog when RPM reports fiscal Q2 2027. A backlog that is being rebuilt, rather than shrinking, would show that orders came back this fall.
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