RPM International (NYSE: RPM) and The Valspar Corp (NYSE:VAL) are both construction companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.

Earnings and Valuation

This table compares RPM International and The Valspar Corp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RPM International $4.96 billion 1.31 $638.94 million $1.32 36.70
The Valspar Corp N/A N/A N/A $4.35 25.97

RPM International has higher revenue and earnings than The Valspar Corp. The Valspar Corp is trading at a lower price-to-earnings ratio than RPM International, indicating that it is currently the more affordable of the two stocks.

Dividends

RPM International pays an annual dividend of $1.20 per share and has a dividend yield of 2.5%. The Valspar Corp pays an annual dividend of $1.48 per share and has a dividend yield of 1.3%. RPM International pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Valspar Corp pays out 34.0% of its earnings in the form of a dividend. RPM International has raised its dividend for 42 consecutive years and The Valspar Corp has raised its dividend for 35 consecutive years. RPM International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares RPM International and The Valspar Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RPM International 3.67% 25.02% 7.14%
The Valspar Corp 6.89% 27.08% 6.98%

Volatility & Risk

RPM International has a beta of 1.54, suggesting that its share price is 54% more volatile than the S&P 500. Comparatively, The Valspar Corp has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500.

Insider and Institutional Ownership

72.6% of RPM International shares are held by institutional investors. Comparatively, 69.6% of The Valspar Corp shares are held by institutional investors. 2.2% of RPM International shares are held by insiders. Comparatively, 3.1% of The Valspar Corp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for RPM International and The Valspar Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RPM International 0 3 4 0 2.57
The Valspar Corp 0 3 0 0 2.00

RPM International currently has a consensus price target of $57.20, suggesting a potential upside of 18.08%. The Valspar Corp has a consensus price target of $110.50, suggesting a potential downside of 2.20%. Given RPM International’s stronger consensus rating and higher probable upside, equities analysts plainly believe RPM International is more favorable than The Valspar Corp.

Summary

RPM International beats The Valspar Corp on 8 of the 14 factors compared between the two stocks.

About RPM International

RPM International Inc., through its subsidiaries, manufactures, markets and sells various specialty chemical product lines, including specialty paints, protective coatings, roofing systems, sealants and adhesives, focusing on the maintenance of industrial, specialty and consumer markets. The Company operates through three segments: the industrial reportable segment (industrial segment), the specialty reportable segment (specialty segment) and the consumer reportable segment (consumer segment). Its family of products includes those marketed under brand names, such as API, Carboline, CAVE, DAP, Day-Glo, Dri-Eaz, Dryvit, Euclid, EUCO, Fibergrate, Flecto, Flowcrete, Grupo PV, Hummervoll, illbruck, Mohawk, Rust-Oleum, Stonhard, TCI, Toxement, Tremco, Tuf-Strand, Universal Sealants, Viapol, Watco and Zinsser. As of May 31, 2016, its subsidiaries marketed products in approximately 164 countries and territories, and operated manufacturing facilities in approximately 120 locations.

About The Valspar Corp

The Valspar Corporation is engaged in developing, manufacturing and distributing a range of coatings, paints and related products. The Company operates through two segments: Coatings and Paints. The Coatings segment includes its industrial product lines and packaging product line. The Company offers decorative and protective coatings for metal, wood and plastic primarily for sale to original equipment manufacturing (OEM) customers in Africa, Asia, Australia, Europe, North America and South America. The Paints segment includes consumer paints and automotive paint refinishes product lines. The Company offers a range of paints, primers, topcoats and aerosol spray paints through retailers, distribution networks and the Company-owned stores. The Company offers a portfolio of interior and exterior decorative paints, stains, primers, varnishes and specialty decorative products, such as enamels, aerosols and faux finishes, used in both the do-it-yourself and professional markets.

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