The One Thing To Settle Before Buying RPM Stock
On October 6, 2026, RPM International (RPM) issued a smaller profit growth forecast to its shareholders for fiscal 2027. To meet even this revised target, the company must raise its prices to offset climbing raw material costs. The construction products business also needs to rebound by the spring. Right now, both outcomes remain uncertain for RPM.
Are RPM’s Prices Keeping Up With Raw Material Costs?
Only in dollar terms. During the fiscal first quarter of 2027, executives noted that RPM successfully offset its higher raw material costs on a dollar basis. Yet the gross margin for the company still fell 100 basis points because the rate of raw material inflation outpaced its pricing. Raw material costs continue to climb. Executives now expect raw material inflation of 9% to 11% during the fiscal second quarter. This is a noticeable step up from their earlier estimate of 6% to 8%.
During RPM’s fiscal first-quarter 2027 earnings call, analysts pressed executives on the full-year outlook. One specific question highlighted how oil and raw materials have climbed again since the previous call.
Kalzip Masked A Drop In RPM’s Construction Sales
RPM has yet to see a recovery in its construction products business. Sales at the Construction Products Group did increase during the fiscal first quarter thanks to the Kalzip acquisition. Without it, sales declined. Executives attributed this drop to a slowdown across education and healthcare, which together make up over a quarter of the group’s end markets. Furthermore, supplier constraints involving polyurethanes left the group short of finished products.
The Construction Products Group remains RPM’s largest group, accounting for 39% of the company’s revenue in fiscal 2026. Sales for that year reached $3.1 billion, up 6.8% from the year before.
What Is RPM Management Counting On?
The company needs a construction recovery in the spring, higher prices, and raw material inflation beginning to ease. RPM now expects adjusted EBITDA, its profit before interest, taxes, depreciation and amortization, to grow by mid-single digits in fiscal 2027. The earlier forecast modeled growth of 5% to 10%. Executives noted that the full-year outlook essentially rests on exactly when the Construction Products Group and the Tremco roofing business recover. They expect the group to return to growth without acquisitions toward the end of the fiscal year.
On costs, RPM is implementing new price increases across most of its construction products and performance coatings businesses during the fiscal second quarter of 2027. Executives expect these prices to be up 2.5% to 3.5% for the quarter. This compares with about 2% across RPM in the first.
Executives anticipate the construction rebound will materialize during the spring months, spanning the end of the fiscal third quarter and stretching into the fourth. Investors will therefore need to watch RPM’s fiscal third- and fourth-quarter 2027 reports to see if the Construction Products Group’s sales growth without acquisitions turns positive.
How To Act On RPM?
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