RPM International

Texas (12/30/2013) – RPM International, Inc. (NYSE: RPM) – Negative Investment Interest based on a recent price of $41.12 and a fair value estimate of $22-$28.

The company and its subsidiaries manufactures, markets and sells various specialty chemical product lines, including high-quality specialty paints, protective coatings, roofing systems, sealants and adhesives.

There is no reason to own this stock at current pricing levels. With y-o-y debt growth of 22%, y-o-y free cash flow growth of (-3%), and y-o-y earnings growth of (-15%) there is currently more downside risk to ownership than upside reward.

Additional risk has been added by a one-year increase in price of 42% versus an 8% increase in revenue which lead to a (-14%) decline in EBITDA. My opinion is that management is simply not paying attention.

If you like the stock, add it to your watch list and wait. Eventually the stock price will come to you. When it gets to $17, I would start a position and dollar cost average down to about $14.


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