Investopedia: Costs Taking Their Toll On RPM International

Much is made of the weak construction markets in North America and Western Europe when talking about specialty chemicals maker RPM International (NYSE:RPM), but that's only part of the story - and maybe not even the most important part. Although strong revenue growth is a goal of most companies, RPM arguably has a more clear and present danger in the form of rising input costs and limited pricing power. Although RPM is a fine company in many respects, valuation still doesn't point to this name as a must-own.

A Fair Fiscal Second Quarter  
RPM International's second quarter was alright, but with a few worrisome trends. Reported revenue did rise almost 11%, with about one-quarter of that growth coming from acquisitions. The industrial segment is still more than two-thirds of sales and revenue growth was a bit light here - up about 10% as reported, but about 40% of that growth was acquisition-related. Volume rose a bit more than 3%, with prices up about a similar amount. Consumer sales were stronger - up more than 12% on a better than 9% rise in volume. (For related reading on acquisitions, see Biggest Merger and Acquisition Disasters.)

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