DATE

• Thursday, July 24, 2025 at 10 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Frank Sullivan
• Vice President and Chief Financial Officer — Michael LaRoche
• Vice President – Treasurer and Investor Relations — Matthew Schlarb
• Vice President and Controller — Rusty Gordon

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RISKS

• Management expects higher net interest expense due to increased M&A-related debt, guiding to a range of $105 million to $115 million for FY2026.
• Raw material and packaging inflation, particularly in metal packaging and propellants, is projected to be a margin headwind, with a negative 4%-5% tariff-related impact potentially unmitigated for FY2026.
• Sustained low or negative DIY activity and a forty-year low in housing turnover have resulted in eight consecutive quarters of flat or declining consumer segment volumes, particularly impacting the Rust Oleum business, as reported for Q4 FY2025.
• Temporary negative price/cost dynamics in Q1 FY2026, primarily due to inflation and lagging price implementation, will offset operational efficiency benefits.

TAKEAWAYS

• Sales Growth: Consolidated sales increased by 3.7%, setting a Q4 FY2025 record, with growth led by systems and turnkey solutions, repair and maintenance products, and recent acquisitions.
• Adjusted EBIT: Adjusted EBIT rose by 10.1% to a record in Q4 FY2025, benefiting from MAP 2025 initiatives, higher volumes, and improved fixed cost leverage.
• Adjusted EPS: Adjusted EPS (non-GAAP) reached a record in Q4 FY2025, driven by improved EBIT performance.
• Geography: Sales growth in Q4 FY2025 was led by Europe, driven by Performance Coatings and M&A; North America by high-performance building solutions; Latin America and Africa/Middle East grew, while Asia declined.
• Segment Performance: Construction Products Group and Performance Coatings Group achieved record sales and adjusted EBIT in Q4 FY2025, while Consumer Group sales declined slightly but reached a record adjusted EBIT margin due to MAP 2025 benefits.
• Acquisitions: FY2025 marked RPM's largest M&A year, with recent acquisitions of TMPC and Pink Stuff; debt increased by $519.5 million year over year due to acquisition funding.
• Cash Flow and Liquidity: Operating cash flow reached $768.2 million for FY2025, the company's second-highest, enabling $39 million (13.5%) higher shareholder payouts and supporting increased M&A activity.
• MAP 2025 Benefits: The operating improvement program is expected to deliver $70 million in incremental benefits for FY2026; since FY2022, adjusted EBIT margin has expanded by 260 bps, and working capital efficiency has improved by 320 bps.
• Cost Actions: SG&A streamlining actions completed in Q1 FY2026 are expected to yield $15 million in annual savings, with about one-third redeployed to higher-growth initiatives.
• Capital Expenditure: CapEx is expected to be in the $220 million to $240 million range for FY2026, up due to facility expansions and plant consolidations, with major projects in Belgium and India.
• Organizational Change: The company shifted to a three-segment structure, with Specialty Products Group operations reallocated to existing segments for improved efficiency and synergy realization.
• Outlook: Fiscal 2026 guidance calls for low- to mid-single-digit consolidated sales growth and high-single- to low-double-digit adjusted EBIT increases, with margin expansion.
• Tariff and Inflation Outlook: Inflation in Q1 FY2026 is projected at 1%-2% (mainly in Consumer), with tariff-related impacts comprising a significant share of input cost pressures; price actions are scheduled for later in the summer and early fall.
• Working Capital: Management expects an additional 200-300 basis point improvement in working capital as a percent of sales going forward, with progress expected in FY2026.

SUMMARY

RPM International (NYSE:RPM) reported record Q4 and FY2025 results, highlighting continued gains from MAP 2025 operating initiatives and its largest M&A year to date. Management announced a structural shift to three operating segments aimed at accelerating revenue synergies and SG&A efficiencies, with immediate $15 million in cost actions and redeployment to growth investments in Q1 FY2026. The executive team anticipates $70 million in incremental operating improvement benefits for FY2026, while also projecting higher net interest expense from increased M&A debt and near-term gross margin headwinds due to raw material inflation and tariffs. Explicit guidance details low- to mid-single-digit sales growth and high-single- to low-double-digit adjusted EBIT growth for FY2026, with improving working capital and capital reallocation set to support further organic and inorganic expansion.

• Frank Sullivan said, We anticipate the ability to consistently generate two to three points of organic growth on a consolidated basis for FY2026. reinforcing a focus on organic growth despite challenging market conditions.
• The consumer segment faces eight quarters in a row of no or negative, DIY takeaway, and we've never seen anything like that, signaling sustained demand pressure.
• The company clarified that Inflation is largely concentrated in our consumer business in early FY2026, particularly around packaging, propellants, and some pigments, but expects price increases to help offset these pressures later in the year.
• Frank Sullivan emphasized that Most of that Q4 FY2025 pickup was from M&A. A significant portion is from Pink Stuff, which has a disproportionate share of its business in the UK and Europe.
• The new three-segment operating model is expected to create both “operational … [and] revenue side” synergies, particularly in industrial coatings and color businesses.
• Working capital improvement opportunity remains, with a target of another 200 to 300 basis points of improvement in FY2026, or potentially extending into FY2027.
• The company reiterated its long-term EBIT margin target, with Frank Sullivan stating, “We are going to get to that 16% market margin target [in the next two or three years],” though not yet expecting that level in fiscal 2026.

INDUSTRY GLOSSARY

• MAP 2025: RPM’s multi-year operating improvement program launched to drive margin expansion, working capital efficiency, and cost savings across businesses.
• Turnkey Solutions: Comprehensive, system-based offerings where RPM provides both products and application services to customers, often emphasizing high-performance buildings.
• SG&A: Selling, General, and Administrative expenses; non-production operating costs subject to streamlining initiatives discussed on the call.
• DayGlo: RPM’s fluorescent pigment brand, highlighted for strategic consumer segment integration and marketing leverage.

Full Conference Call Transcript

Frank Sullivan: Thank you, Matt. I'll begin today's call with a high-level review of our fourth quarter and full year results and some additional details on our newly announced three-segment operating structure. Then Michael LaRoche will cover the financials in more detail. Matthew Schlarb will provide an update on cash flow and the balance sheet. And finally, Rusty Gordon will then conclude our prepared remarks with our outlook for fiscal 2026 full year and the first quarter. As always, we'll be happy to answer your questions after our prepared remarks. Highlights from our fourth quarter results can be found on slide three.

Thanks to the hard work of RPM associates, we demonstrated the power of RPM as we combined solid top-line growth with improved operating efficiency that has been enabled by our MAP 2025 operating improvement initiatives. This resulted in fourth quarter sales, adjusted EBIT, and adjusted EPS all at record levels. We generated positive volumes led by systems and turnkey solutions for high-performance buildings as well as our focus on maintenance and repair. The volume growth resulted in improved fixed cost leverage and allowed us to better realize the financial benefits of our MAP 2025 operating improvements.

All segments increased adjusted EBIT with the largest growth coming from our Construction Products Group and Performance Coatings Group, which generated volume growth that leveraged MAP '25 benefits to the bottom line. Additionally, three of four segments generated record Q4 adjusted EBIT. Turning to slide four, the record results we generated in the fourth quarter reflected a strong and consistent trend as we had delivered record adjusted EBIT in 13 of the last 14 quarters. In fact, we generated record annual sales, adjusted EBIT, and adjusted EPS in each year since we began the MAP 2025 program in what can be best described as a mixed economic environment. Additionally, in fiscal 2025, we generated a record adjusted EBIT margin.

Moving to slide five, in addition to the consistent progress we've achieved, the cumulative impact of these improvements during MAP-twenty five has been significant. Compared to our baseline fiscal year of 2022, we expanded gross margins close to our 42% goal, adjusted EBIT margin by 260 basis points, and improved working capital as a percent of sales by 320 basis points. These improvements in margins and working capital efficiency strengthen our cash flow and allowed us to complete the largest year of acquisition in RPM's history in fiscal 2025. Importantly, our balance sheet remains strong with credit metrics still close to our best ever. These results are a testament to the dedication and relentless persistence of our associates.

And I want to thank them for their execution of our operating improvement initiatives and commitment to RPM during this challenging low growth, no growth environment. As we look to the future, we are focused on realizing the full power of RPM, essentially building on the efficiencies we have ingrained into our businesses and accelerating growth to take full advantage of those efficiencies. To accelerate growth, we are taking a more strategic approach to allocating capital to both organic and inorganic opportunities. This includes leveraging the progress we have made in data analytics through MAP-twenty five to capture true profitability so we can focus investments on the highest potential opportunities and then aggressively pursue growth in those areas.

We are starting to see this take hold as we begin fiscal 2026. As an example, we recently implemented million dollars in SG&A streamlining actions and a portion of these savings are being reallocated into our highest growth opportunities in attractive end markets like turnkey engineered solutions, cleaners, and international markets in the developing world. These investments are in areas such as technical sales force expansion, marketing, new products, and new facility build-out. One other key element of our growth plan that has been enabled by our MAP 2025 initiative is a cultural shift that has taken place to allow our businesses and associates to collaborate more closely or what we call connections creating value.

This will drive additional organic growth opportunities and synergies in 2026 and beyond. To accelerate this shift towards realizing the full power of RPM, we've changed our operating structure to three segments: Construction Products Group, Performance Coatings Group, and the Consumer Group. As you can see, this new structure on slide six, businesses that have previously been part of our specialty product group are now reorganized under the three groups mentioned above. This new structure will allow us to achieve additional operational and administrative efficiency and enable our businesses to work more closely to realize synergies in new business generation, product development, and sourcing.

For example, our industrial coatings group of businesses has joined the performance coatings group and will benefit from improved collaboration on high-performance coatings development with our Carboline division as well as a broad distribution network, which will improve customer service levels. The color business has now joined the consumer group which through insourcing has become Dayglo's largest customer. The new structure will allow cooperation more closely and efficiently in color specifications, a critical component of our consumer products, in particular Rust Oleum. This change will also allow the Color Group to operate with a more streamlined overhead structure and leverage our Consumer segment's strong marketing know-how to raise the profile of our well-known DayGlo fluorescent pigment brand.

Importantly, this will not change what has served our RPM so well throughout our history. Having an entrepreneurial culture that serves our customers with leading brands, products, and services and staying true to our core values of operating with transparency, trust, and respect. We are pleased with the fourth quarter results our associates achieved in a continuing low to no growth environment which continues to be unsettled due to the ongoing tariff uncertainty. We are optimistic about our opportunities to continue this positive momentum into and throughout fiscal 2026. I'll now turn the call over to Michael LaRoche to cover our financials for the quarter in more detail.

Michael LaRoche: Thanks, Frank. On Slide seven, consolidated sales increased 3.7% to a fourth-quarter record led by systems and turnkey solutions for high-performance buildings, a focus on repair and maintenance solutions, and acquisitions. Q4 adjusted EBIT increased 10.1% to a record as volume growth allowed us to better leverage MAP 2025 initiatives and overcome headwinds from temporary cost inefficiencies from plant consolidations and raw material inflation which was driven by metal packaging. Profitability headwinds included higher M&A expenses, higher variable compensation associated with the sale of technical products, and the SG&A from acquired businesses, partially offset by SG&A streamlining actions. Fourth-quarter adjusted EPS was also a record driven by the improved adjusted EBIT. Turning next to geographic results on Slide eight.

Growth was led by Europe, where growth in Performance Coatings and M&A benefited sales. In North America, sales growth was driven by system and turnkey solutions serving high-performance buildings. Emerging market sales were mixed. Latin America grew excluding FX, Africa and the Middle East grew modestly in addition to solid prior year sales, and Asia declined as economic conditions in the region remained soft. Next, moving to the segments on Slide nine. Construction Products Group sales increased to a record driven by systems and turnkey roofing solutions serving high-performance buildings. This was in addition to strong prior year results. MAP 2025 and higher sales of Engineered Systems and Services that expanded margins drove record adjusted EBIT.

This was partially offset by temporary inefficiencies from plant consolidations. On Slide 10, Performance Coatings Group achieved record sales, led by Turnkey Flooring Solutions serving high-performance buildings, fiberglass reinforced plastic structure growth, and M&A. Adjusted EBIT was a record as higher volumes improved fixed cost leverage, which was aided by MAP 2025, and as a result of sales mix improvement. Moving to Slide 11. Specialty Products Group sales improved as specialty OEM showed signs of stabilization after a cyclical downturn. Food Coatings continued to perform well and was aided by a prior acquisition. Demand was soft in the Fluorescent Pigments and Disaster Restoration businesses.

Adjusted EBIT increased thanks to MAP 2025 benefits, partially offset by a $2.5 million bad debt expense due to a customer bankruptcy and higher start-up expenses at our resin center of excellence. On Slide 12, the Consumer Group sales declined modestly as new product introductions, and one month of the Pink Stuff acquisition were more than offset by continued DIY softness. We also continued rationalizing SKUs which had a negative impact on sales, but helped improve the adjusted EBIT margin. Adjusted EBIT increased to a record driven by MAP 2025 benefits, which more than offset the sales decline and raw material inflation. Now I'll turn the call over to Matt who will cover the balance sheet and cash flow.

Matthew Schlarb: Thank you, Mike. Our strong cash flow in fiscal 2025 was enabled by MAP 2025 profitability and working capital improvements allowed us to continue returning cash to shareholders in the form of dividends and share repurchases. Overall, these increased $39 million or 13.5% over the prior year. Operating cash flow for fiscal 2025 was $768.2 million, the second-highest amount in the company's history, surpassed only by the prior year when there was a large working capital release when supply chains normalized. During fiscal 2025 fourth quarter, inventories increased as we made strategic purchases of raw materials to mitigate the impact of future tariffs.

This strong cash flow also contributed to the funding of several acquisitions in 2025, which is the largest M&A year in RPM's history. This momentum has continued in the New Year with the acquisition of Ready Seal, a leader in high-quality and easy-to-use exterior wood stains during the first month of fiscal 2026. Debt increased by $519.5 million year over year, primarily driven by the funding of TMPC and the Pinkstuff acquisitions. Despite this debt increase, our leverage ratio is near all-time best levels and liquidity remains strong at $969.1 million.

CapEx increased $15.9 million over the prior years as we invested in growth projects, including the Residence Center of Excellence and a distribution center, both of those facilities being in Belgium, a new production and research facility in India. The consolidation of eight plants through our MAP 2025 program also contributed to the higher CapEx. Now, I'd like to turn the call over to Rusty to cover the outlook.

Rusty Gordon: Thank you, Matt. Moving to our full-year outlook on Slide 14, we expect another year of record sales and adjusted EBIT in 2026 including margin expansion, as we benefit from MAP 2025 carryovers as well as from recent acquisitions. We expect sales to increase low to mid-single digits and adjusted EBIT to grow in the high single to low double-digit range. We will leverage the things within our control including implementing additional efficiency initiatives, and focusing on turnkey and system solutions for high-performance buildings. Our new three-segment organizational structure will contribute to improved collaboration and SG&A streamlining. Overall, SG&A streamlining actions completed throughout the first quarter will save around $15 million on an annualized basis.

With most of the benefit coming in future quarters. Approximately one-third of these savings will be reallocated into higher growth business platforms for technical sales force expansions, and increased marketing activities. Additionally, we are in the process of consolidating eight less efficient plants while opening three plants in fast-growing international markets that will be shared by multiple RPM businesses. We expect higher pricing in response to inflation, particularly the tariff-related inflation we are unable to otherwise mitigate. We will also benefit from the businesses we have recently acquired. Interest rates are an important variable that we will be watching. They have remained elevated.

Which has pressured existing home sales and DIY activities and have also been a headwind to some new build nonresidential construction. Higher debt balances from M&A will also contribute to increased net interest expense which is expected to range between $105 million and $115 million for the year. Our first quarter outlook can be found on slide 15. We expect sales growth and record adjusted EBITDA in the quarter led by systems and turnkey solutions serving high-performance buildings, as well as a focus on repair and maintenance which customers tend to gravitate toward during times of economic uncertainty.

Additionally, we will benefit from a full quarter of the Pink Stuff acquisition and the ReadySeal acquisition which closed a couple of weeks into the first quarter. We also expect inflation to continue increasing in the quarter particularly in metal packaging. Which has been rising in response to tariffs. This will temporarily cause price cost to be negative during the quarter as not all price increases were fully implemented at the beginning of the quarter. These profitability headwinds are expected to offset operational efficiency benefits during the quarter. Overall, we expect consolidated sales and adjusted EBIT to both increase by low to mid-single digits in the quarter.

By segment, we anticipate similar sales growth among the three groups with consumer slightly higher because of their acquisitions of the Pink Stuff and Ready Seal. That concludes our prepared remarks, and we are now happy to answer your questions.

Operator: We will now begin the question and answer session. Our first question today is from Michael Sison with Wells Fargo. Please go ahead.

Michael Sison: Really nice quarter and outlook. Frank, I'm just curious in terms of what underlying demand or organic growth do you see this year? I know you have some acquisitions. Within your outlook for low single-digit growth in sales. But just a little bit of color on what you think the organic growth can be in this difficult environment?

Frank Sullivan: Sure. Broadly speaking, and you've heard this on some of our more recent investor calls, as we were approaching the end of our MAP-twenty five initiative which formally ended at 05/31/2025, we've been talking within RPM about a pivot to growth. And we're starting to see that take hold. I think we anticipate the ability to consistently generate two to three points of organic growth on a consolidated basis. For the year. I think the two biggest challenges, that are kind of the dynamic factors is to whether things could be better are certainty and finality around the tariff issues or not.

And the worm turning for the consumer DIY business which is, see twenty four months of no or negative growth on a on a pretty regular basis and something extraordinary in our history. But you're seeing a really solid organic growth out of CPG and PCG. And things move in the right direction after a challenging eighteen months in the industrial coatings group. So more OEM coatings that was the largest piece of our specialty products group. I think those are the key factors that give us confidence that we're going to see modest organic growth quarter by quarter for the year.

Michael Sison: Great. And a quick follow-up. The new three segments structure, does that enable you to generate more productivity cost savings down the road? And how do you think about that? With the new segments?

Frank Sullivan: Absolutely. So at the start of our MAP initiatives, seven years ago, so in the fall of twenty eighteen, our Specialty Products Group was about 11% of consolidated revenues. And somewhere in the 18 or 19% of consolidated EBIT. They, through economic challenges, and some underperformance in a few units, shrunk to this past year where they're slightly less than 10% in each case. And so we saw that in conjunction with the retirement of the group president, Ronnie Coleman, who's been with us for more than three decades. To consolidate those specialty products group businesses into the other parts of RPM. Benefit from upfront about $15 million of expense reduction or efficiency actions taken in Q1.

Will benefit from the synergies both operationally, internally, and externally. I mentioned in my prepared remarks the opportunities to coordinate better the activities of our industrial coatings group with Carboline, which will now both be part of the Performance Coatings Group. We think that not only is our things improving in our color group, but on a $100 million business, their largest single customer is $8 million of sales to Rust Oleum. Rust Oleum is in the color business, and so it's a combination that we think will move our color business and our Day Glo business forward better than had it continued to operate as an independent company.

So those are just some examples of the synergies we see both on cost side as well as on the revenue side.

Michael Sison: Right. Thank you.

Operator: The next question is from John McNulty with BMO Capital Markets. Please go ahead.

John McNulty: Good morning, John. Congratulations. Hey, Frank. Great results. I guess I two questions. One is on the map 25 program, and I know I know it sounds like there may be a new one coming soon, but I guess, you help us to understand how much in terms of incremental savings in 2026 you may be expecting just so we can kind of have a good baseline to work with? And then the other question is just you made some pretty significant improvements on the working capital front. In the MAP '25 program. I guess how much of that do you feel like you still have left to go?

Because I think in the prior couple quarters, were at least implying that there's still some pretty heavy lifting going on there. So can you help us to think about both of those?

Frank Sullivan: Sure. I'll give you a couple, data points, which really highlight why we feel you know, we'll have a choppy first quarter in terms of poor leverage because of the cost price mix dynamic that we're facing. But a combination of price increase in a number of our businesses or product lines that are rolling out the July and into August and early September will help. Specific to your question, the MAP 2025 benefits in fiscal twenty six should be about $70 million across the full year.

And then I think the last area will be the benefit of the one expense reduction actions associated with the consolidation from four segments to three which will start benefiting from in the future quarters. Those are the key elements in terms of how we think about it. Relative to working capital. There is still a 200 or 300 basis point improvement that we expect. You will see forward progress in fiscal twenty six whether or not we get all of that in 2026 or it bleeds into '27, time will tell. But we will make forward progress this year. And our goals, which we intend to meet, are to gain another 200 or 300 basis points of improvement.

John McNulty: Got it. Okay. No, that's great. And then just as a follow-up, it seems like the dams kind of opened up a little bit with regard to M and A. I guess, you help us to think about the M and A pipeline as you're looking out to 2026 at this point? I know you've completed a bunch, but you still the middle, you still have a really strong balance sheet and more cash flow to come in. So how should we be thinking about that?

Frank Sullivan: Sure. I'll tell you both culturally, but also in terms of metrics, the benefits of the MAP initiatives that our people have executed over the last seven years through a improved EBITDA margin, which is a that the rating agencies and banks look at and a sustainably improved cash flow including Ready Seal and the pink stuff and TMPC the last twelve months. We've completed over $600 million of debt funded acquisitions. A decade ago that would have challenged your balance sheet a little bit. Today, it modestly moves those ratios. And so we've got plenty of dry powder. We're also seeing in these transactions and you and it happened later than you would have expected.

But we went through a period of incremental debt cost of capital for big companies of almost zero. To a period where the cost of capital, even on an incremental basis, is in the 5% or 6% range. And you would have expected that to bring down M and A valuations. It has. It took longer than maybe you would have expected. But the transactions that we're being successful on today are at historically high multiples for us, but two or three multiple turns below where, transactions were happening. Maybe two or three years ago.

And, we're in a good position to take advantage of that and I would expect our traditional acquisition growth machine to deliver more revenue growth and more deals this year and in subsequent years.

John McNulty: Great. Thanks very much for the color. Congratulations on the quarter.

Frank Sullivan: Thank you.

Operator: The next question is from Kevin McCarthy with Vertical Research Partners. Please go ahead.

Kevin McCarthy: Good morning, Kevin. Thank you and good morning. Good morning, Frank. Congrats on the results and particularly nice to see the strength in consumer Construction Products against the current macro backdrop. On slide seven and eight, you talk a little bit or reference at least your success in systems and turnkey solutions. So just wonder if you could frame that out a little bit in terms of you know, maybe the size of what you're doing there, the growth rates, and my impression is you were a first mover in that regard. And I'm curious as to whether any of your competitors are adopting that sort of turnkey model.

Or whether you have a lot of runway, in terms of first mover advantage there?

Frank Sullivan: Sure. I can't really speak to competitors, but I can tell you that we have had in our Construction Products Group a very deliberate effort over the last, let's say, five years maybe even a little bit longer, but it's really starting to take hold in the last year or two. Of moving from selling components to selling systems. And so with the advent, so Drive It was a own business a decade ago selling exterior finishes and eaves Tremco sealants sold their sealants into construction projects via distribution and through specifications. Today, they're really focused on six sides of the building. Through acquisition and internal development.

We've acquired things like Nudura, so ICF, panelization, And so when you think of a wall system a decade ago, we were providing all of the high margin sealants, gaskets, and the elements around window door penetrations, roof connections to walls, Today, we have a much larger share of that wall. We have high performance building solutions in New York. We have opportunities now to be more of an add maintainer with some of our big customers instead of just doing reroofing or owning roofing. We now have PureAir, which allows us to address maintenance and rehabilitation of big HVAC units, which we've been asked for decades by customers, hey, while you're on a roof, can you fix this?

We didn't have a very good answer. We do now with PureAir. So we've really been thinking about both asset management and what that means and system solutions. And how we own a bigger piece of the wall not just the sealant or gasket or, you know, unique components. So that's been one critical area. I think the other critical area in our StoneHard flooring business in particular in Trentco roofing is we've had for decades a unique supply and apply model. And in a labor challenged environment, that gives us an advantage in some circumstances and we're seeing those benefits as well.

The last comment in this area and highlights some of the outperformance of our Performance Coatings Group and our Construction Products Group they have essentially teamed up in a what we call a platform approach to the developing world. Five years ago, we did a full blown analysis with our board on acquisitions. And the one area that stood out is not being successful was what we deemed small and far away. A strategy of planting a flag you name it in Indonesia, in Dubai, in Poland, wherever, in different places. And we really weren't following up. So, you know, we had these small operations, but there wasn't a lot of synergy and attention paid to them.

We have reorganized developing world approach under one leadership team. Get the same attention as each of our groups in terms of monthly performance and outlook. And so I think we have a strategy to grow in the developing world particularly across our industrial and commercial product lines. That's starting to come to fruition that quite candidly five years ago wasn't working. So you put all of those together, and I think it explains the outperformance in our CPG and PCG businesses and why we think that's gonna continue.

Kevin McCarthy: Very interesting. My second question is for Rusty. Would you comment on what the passage of the one beautiful bill act means for RPM? For example, you know, do you anticipate lower cash taxes given the provisions related to accelerated depreciation and R and D expensing?

Rusty Gordon: Sure. Yeah. We are still sorting through that, Kevin. In general, it's good news that the corporate tax rate is not going to 28%, which was proposed in the last administration. Also, mentioned bonus depreciation. Yes, that should spur investment, and that would be great, as you can imagine, for RPM. Manufacturing, of course, is one of many sectors of construction that we service. And in terms of I understand is that yes, from a tax perspective, is looking like that the depreciation on our $220 million a year of capital spending can be basically, we can expense the purchase of tangible property at 100%, not 40%. Which was the case prior to January.

So nothing but good news, but still a lot to sort through.

Kevin McCarthy: Thanks very much.

Operator: The next question is from Patrick Cunningham with Citi. Please go ahead.

Patrick Cunningham: Good morning. Hi. Good morning. Can we maybe unpack the sort of price cost, particularly in 1Q and then expectations for the balance of the year? And are the biggest pricing opportunities more in these turnkey systems where you're seeing strong demand and have the value proposition? Or is it is there anything more broad based there?

Frank Sullivan: I think broadly, we look at pricing and have better discipline through our MAP initiatives across all our businesses. Specific to Q1, our big challenge is in consumer. There's a couple of commodity chemicals that are actually showing deflation. One exception, which hurts our industrial businesses is a epoxy resins, which we're a huge buyer of. Those were up low double digits. But specifically to consumer, metal packaging is a real challenge. Plastic packaging is up modestly. Pigments are up double digits. Propellants are up 13% or 14%, And so when you look at our Rust Oleum business in particular between metal packaging, and propellants. It's a real challenge. And they're managing on the operating side to find efficiencies.

But we're going to need some price there and have plans to get it at the end of the summer and early fall. So that explains kind of the challenge in Q1 where I would expect us to demonstrate like we did in Q4 real solid growth. Positive organic growth in our industrial and commercial businesses. But a lack of leverage because of some of the segment consolidation activities that are driving some cost. Some of the MAP initiatives that are driving some duplicate cost, as for instance we're closing a major Tremco plant and in the of moving all that production into two plants in The United States. We have some similar activities in Europe.

Which cannot be adjusted out. And then I think those are the key elements of what will drive a lack of leverage in Q1. But as I said earlier, expense reduction actions in Q1 in relation relationship to the segment consolidation price increases that are scheduled here for the July into August and early September. And then broadly, the benefits of MAP-twenty five on the rest of fiscal 'twenty six will show some nice leverage to the bottom line of the growth that we put forward in the quarters after Q1.

Patrick Cunningham: Great. Very helpful. And then in the prepared remarks, you talked about potential headwinds to non resi construction. Can you speak to the health of the project backlogs and Construction and Performance Coatings? Are you starting to see any commitments slow or maybe delays impacting the conversion of the existing backlog?

Frank Sullivan: No. The backlogs for those businesses are really strong. The challenges that we'll face are just difficult comps, both PCG and CPG had really strong years in fiscal twenty five. Really strong years in fiscal twenty four. So you know, it's it's we're rounding some more challenging comps. But as you saw in Q4, we're generating some pretty solid low single digit mid single digit organic growth. And a lot of it's around the systems, a lot of it's around the advantage of the supply and apply model. And we expect that to continue. The other thing that they were working at is in our consumer DIY business.

We have been introducing in our DAP business and our Rostolian business new products. There's a low odor product, water based low odor product just introduced at Rust Oleum. There's some new single component foams that were introduced in the past six or nine months at DAP. The move into cleaners with the paint stuff really puts us on the map. Where previously we had somewhere in the $50 million to $70 million range. Of kinda niche cleaning products. Now we'll have north of $250 million in the cleaning category. And importantly, the pink stuff gets us into channels that we didn't have much of a presence in.

Grocery, discount, drug, And so these are thousands of outlets where the pink stuff is a broad cleaning category versus the niches we had in the crud cutters and the concrobiums. And so a very deliberate strategy to diversify into new channels and into a new cleaning category with some of the disciplines our consumer group has. And hopefully, will begin to pay off in fiscal twenty six despite you know, the lack of housing turnover and its impact on DIY markets, which is not really which has been bad for the last couple of years.

Operator: The next question is from Michael Harrison with Seaport Research Partners. Please go ahead.

Michael Harrison: Good morning, Mike. Hi, good morning. Congrats on a nice quarter and pretty good looking guidance. I was hoping that you could maybe help us take a step backwards and just help us understand in the fourth quarter, you guys were pretty meaningfully ahead of your expectations. I was hoping you could walk through what areas specifically were better than you anticipated? Where do you feel like you were right to be more cautious? And can you help us understand how demand trends in some of your key segments or product lines were playing out in April into May into June. I think your press release referred to some momentum on the outlook.

And I'm just curious what specific areas you guys are seeing this momentum?

Frank Sullivan: Sure. So a couple of things. One is the new products in consumer that I mentioned, a lot of which were introduced this spring and so that's starting to take hold. And is helping us fight an otherwise broad economic challenge in that area. Another one is what we're doing in the developing markets. We're seeing double digit growth and EBIT margin improvement that's meaningful in local currencies. Currencies didn't help us last year. Looks like currencies might actually be a tailwind in fiscal twenty six, so that's good news. And then I will tell you that if you see the detail in our press release on PCG, and CPG.

As I indicated earlier, I think we can generate a solid two or three points of real unit volume growth. We had better than that Q4. Some of that was weather related, delays from the Q3, which we had talked about in Q3. And thankfully, the great momentum that we built from Q1, Q2, and through Q4 that we continue to see back to your question as we get into '26, Q3 was really a odd winter interruption. You know, our fiscal year end helps us in some ways and hurts us. In this case, the calendar didn't help. Our Q3 was December, January, February. And the weather was terrible.

Had our Q3 been a January, February, March on a calendar quarter like most of our peers, our results would have been better. And so I think it's a combination of those things that explain the strong fourth quarter, but the continuing momentum, if you really think Q3 as an aberration, we're showing momentum from Q1 Q2, Q4, and we see that continuing as we enter fiscal twenty six.

Michael Harrison: Alright. Very helpful. And then I'm just curious in terms of the inflation that you're seeing would you categorize that as being normal supply and demand fluctuations? Or do you think it's driven more by tariff impacts? I think we're just trying to get a sense of whether we could still expect some further changes in what you're seeing around input costs depending on what happens with, with trade policy?

Frank Sullivan: Sure. Our best guess and we look at it pretty in great detail, of the unmitigated impact of tariffs as they stand today. And of course, can all change next week or next month. But our best guess today is a negative 4% to 5% hit in fiscal twenty six. You know, we have some mitigation activities in terms of agreements with vendors. We have some opportunities to as we talked about, for instance, pink stuff, moving production for the pace that they sell in The US to adapt plants. So we're working on that. That's just one example. And then the final area would be in price increases.

From an inflation perspective, I would tell you that this is a rough guess, and this is Frank Sullivan. But I think half to two thirds is truly tariffs. And half to one third is the response of domestic suppliers taking advantage of the tariff regime to raise prices. Steel is a great example. You know, tinplate does come a lot from overseas, not a lot of production in The U. S. But the aggressive pricing of steel companies because they can. It's a challenge for anybody to buy steel these days.

Michael Harrison: Alright. If I could sneak one more in, just curious if you can give any guidance on depreciation and amortization for fiscal twenty six as well as the CapEx outlook?

Rusty Gordon: Thank you. Sure, Mike. Yes. So for depreciation and amortization, it should be around $200 million for fiscal year 'twenty six. The increase really driven by the M and A we've done. Also some of the higher CapEx spending we've had. And then when we look at CapEx for the full year, too, we have should be about $220 million to $240 million. That would be the range. And just also, mentioned this on the call, but just to reiterate, interest expense will be higher this year because of the additional debt that's been used to fund these M and A. So we expect net interest expense to be between $105 million and $115 million for the year.

Operator: The next question is from Matthew Ioey with Bank of America. Please go ahead.

Matthew Ioey: Good morning. I'm not sure I've ever heard that last name pronunciation. I like that one. But congratulations, I guess, it was a good quarter and obviously some of this organic growth. I wanted to touch a little bit on the flooring side of the equation. I mean, some of this reflective of the data center AI build out. Is that manifesting into critical mass here or is this still an opportunity to come as it relates to like?

Frank Sullivan: Still more opportunities there. We are seeing some benefits in certain areas, in particular our fiber grade business and FRP grading and its non-conductive nature in data centers. We're seeing some in flooring and coatings. I would say we're getting our share. I would not say yet we're getting, more than our share and we're working on that. And in general, you know, we're just seeing a nice uptick in small to medium-sized flooring projects along with some of the larger, more headline projects that are out there. And some of it's a really focused sales force, and I do believe some of it is our supply and apply model which in a challenging labor environment is helping us.

Matthew Ioey: I appreciate that. And, think by our estimate we have something like $230 million in top line contribution to deals next year. Is that right? And what do you expect EBITDA contribution from that? And kind of related SG and A was up because of some of this deal some of the deal activity that mostly just one-time legal banker fees? How with the streamlining, how should we expect SG and A to kind of flow through the year?

Rusty Gordon: Sure. Yeah. I can take that one. In terms of acquisitions, we've announced the pig stuff acquired at the May. And annualized, that's £150 million. And then we just acquired Ready Seal in the June. We disclosed that at 40 million US dollars. So you can model those in. And you're Matthew. On acquisition, deal costs, they were elevated. In Q4. And they'll continue to be elevated in Q1. As Frank indicated on the last call, that's actually a favorable indicator for RPM when those costs are up, activity is robust. And we would expect that to hopefully continue.

Matthew Ioey: I appreciate it. Thank you.

Operator: The next question is from Josh Spector with UBS. Please go ahead.

Josh Spector: Good morning, Josh. Hi, good morning. Frank. Just a couple of quick follow-ups. First, on raw materials, I apologize if I missed this, but previously, you said mid single digit inflation is where you thought we'd get to. Your latest view there?

Frank Sullivan: Yes. In general, I think as we start the year, we're seeing broadly on a consolidated basis inflation in the 1% to 2% range. But it's kind of heavily weighted towards what's happening in our consumer business. Around packaging, propellants, and some pigments. And I'm hopeful that as this tariff issue gets some certainty and is settled down, that we'll see that simplify. You know, as I indicated earlier, unmitigated, we see a 4% to 5% impact of the tariff regimes and our ability to offset some of that through moving manufacturing and or agreements with some of our suppliers will help.

And, it would be nice to get through half of this year and have some of that VUCA uncertain, volatile, changing every week provide some certainty in which people can plan around. And as Rusty mentioned, that and some of the positive impacts of the one big bill on manufacturing investment I think we'll get people off the sidelines in terms of making decisions on additional projects with will help us.

Josh Spector: Okay. I guess what I was trying to figure out is, so does that 1% to 2% inflation peak earlier in the year? Is that the mitigated impact? Or do you expect that to increase as we go through the year?

Frank Sullivan: The 1% to 2% inflation is what we are seeing in Q1. And it's disproportionately weighed towards consumer.

Josh Spector: Okay, thanks. I'll leave it there.

Operator: The next question is from David Begleiter with Deutsche Bank. Please go ahead.

David Begleiter: Thank you. Good morning, Good morning. Frank, just on in consumer, the organic down 3.8% in the quarter. How much was due to the SKU rationalization? If you remainder, are you seeing greater pressure on the consumer as we speak? Or is it pretty much just the same?

Frank Sullivan: It's pretty much the same. We just finished our second year or eight quarters in a row of no or negative, DIY takeaway, and we've never seen anything like that. It's an unprecedented. And it seems to be flatlining, if you will, but there's no real dynamic here. We're at a forty year low in housing turnover. And certainly others have lamented that and that's a challenge in this area. It's predominantly in our Rust Oleum business. And small project paints in part because of their size and their market share. DAP continues to build momentum and show some positive momentum throughout '25 and as we get into '26.

They have more of a contractor customer base than our Estonian business does. We're actually performing pretty well in European marketplace. However, in Europe, we are in the process of discontinuing a lower margin product line and closing a factory there. And so that was part of the negative impact. On an annualized basis, the SPS business was $50 million and most of that will go away. And we're in the process of transitioning that into weather plan and then we are looking to sell the facility.

David Begleiter: Got it. And just back on raws, on Tuesday, one of your Cleveland based peers lowered their back half raw material guidance. They're seeing reductions in solvents and resins. Why did it disconnect with what you're seeing? Or is it just more packaging related costs? Or maybe you can help us there.

Frank Sullivan: Sure. So to the last question, which I was really trying to get at the same thing in terms of where we see inflation going. I don't know. All I can tell you is that in Q1, our inflation on a consolidated basis going to be 1% to 2% and it's mostly in consumer. And it is so metal packaging as we sit here today is up 11% or 12%. Propellants up 13 or 14%, plastic packaging is up 1% or 2%, pigments are up 10%. Those are there are some solvent areas that are going down. The one exception, which is a meaningful raw material for RPM across the board is epoxy.

So we're big producers of epoxy floor coatings, epoxy coatings, epoxy sealants, And so that's up about 11%. Certain solvents and other things are moving in the right direction. If oil prices move in the right direction, that'll be good. But given the impact that tariffs have and the uncertainty from one way to the next, other than being able to forecast a 1% to 2% inflation and give you the details we just did, We don't really have a clue as to you know, where things are going post this fall and into next year. Thank you.

Operator: The next question is from John Roberts with Mizuho. Please go ahead.

John Roberts: Thanks, and I'll add my congrats. Is there a home for all of SPG in the other three segments?

Frank Sullivan: Yes. So if you look at the Color Group, roughly $100 million $8 million of that is intercompany sales from our Color Group to Rust Oleum. And the color group is about color. It's a great fit. And there's opportunities with our best consumer marketers to do things with the Day Glo brand that up until now we have not. Our Legend Brands business is really asset management. And as we get into businesses like PureAir, which is the refurbishment and rehabilitation of major rooftop HVAC units. It really fits into that same thing. That's about a $100 million and then the balance of the $700 million SPG prior segment is the industrial coatings business and the food business.

Food business the food coatings business, not a lot of synergies. It's just a great business higher than RPM margin profile at the gross margin and EBIT margin level good solid growth. It had to go somewhere. So it's going to the performance coatings group. But the other three elements all have really good strategic fits.

John Roberts: And then you had a customer bankruptcy in SBG last quarter, and prior you had a bankruptcy in the consumer segment. I know you said the backlog is relatively strong, but are you seeing signs of stress across other areas of your customers?

Frank Sullivan: Not that we're aware of today. The dynamics in the air handling, air moving, rehabilitation Legend Brands business are changing. And it's moving a little bit from distribution to direct sales. And so there's a lot of dynamics along the lines of what you're asking. That's about a 100 a $100 million business for us. Other than that, you know, we don't see any signs of stress from our customer base or any expectations of further bankruptcies.

John Roberts: Okay. Thank you.

Operator: The next question is from Frank Mitsch with Fermium Research. Please go ahead.

Frank Mitsch: Good morning, Frank. Good morning, Frank. To you as well. I'd love to get invited to one of the local Cleveland business meetings where you get together with some of the steel guys. I'm sure it's I'm sure it's a very light environment. I wanted to follow-up on the MAP savings for fiscal twenty six. And confirm the $70 million that you referenced that from MAP would go into '26, that's an incremental number. Correct?

Frank Sullivan: That's correct. So you know, we formally concluded the MAP 25 program at May 31, but there were activities throughout fiscal twenty five and trends in plant closures and some other activities on operating efficiencies within our plants that will benefit and including some plant closures that are in process but not completed in fiscal twenty six. That will positively impact this new fiscal year. And that 70,000,000 is incremental. That's That's correct.

Frank Mitsch: Alright. Terrific. So I if I basically add that to fiscal twenty five, assuming that's incremental, then you're basically at the low end of the guide for the full year. So hopefully, have a better economic environment And then, on Europe, to get to the high end and beyond.

Frank Sullivan: Let me just address that Frank. Not just doesn't flow to the bottom line, the inflation that we have on talked about is on the non material side. Wages are up, and salaries are up about 3.54%. We're seeing huge increases in insurance costs and in medical costs. So there's a lot of moving parts in any business and sort of a lot of moving parts at RPM. But you got to offset a portion of that 70,000,000 with a wage salary increase in the 3 and a half to 4% healthcare costs and insurance costs that I mentioned. So, are tens of millions of dollars of rising costs across our business that are not associated with raw materials.

That we're also managing.

Frank Mitsch: That's a that's a good qualifier. Appreciate it. And then lastly, Europe, obviously, impressive performance. Part of that M and A related. Can you talk about the sustained how much of that 15% was coming from M and A and how sustainable that improvement in Europe? Have you seen the bottom there? And how is the outlook, please?

Frank Sullivan: Sure. Most of the growth was M and A. We're seeing a nice improvement in profitability through bringing the MAP initiatives maybe later than we started in North America to Europe. Dave Bensdead, who was President of our Performance Coatings Group moved his family to Europe a couple years ago to oversee and drive a lot of these operating improvement initiatives. So on a core basis, our revenues have been relatively flat. Most of that fourth quarter pickup was M and A. A big chunk of that is the pink stuff, which is disproportionate chunk of its business in Europe, UK and Europe. The margin profile there is improving.

And the cash flow there is improving and there's more to come on that.

Frank Mitsch: Very helpful. Thank you.

Operator: The next question is from Vincent Andrews with Morgan Stanley. Please go ahead.

Vincent Andrews: Good morning, Vince. Thanks. Good morning. Most of my questions have been answered. So I'm just going look for some clarification on something that I'm hearing different points of view on in the investment community. Which is, is there gonna be a formal MAP three point o program And if so, when do you think you'll you'll introduce it to us? And I think from your prior comments, it seems like if so, it'll it'll be much more of a revenue oriented or growth oriented program from a revenue perspective rather than a lot more on the cost side of the equation. So any thoughts on that would be helpful.

Frank Sullivan: Sure. The answer is yes. There will be a new program what we call it is still up for debate I think given the uncertainty around tariffs and the stock starts change next week. And the decision that, you know, we came to over the last six months or so to think about, alright, what's the right structure going forward in this move from four segments to three segments? Think all those are dynamics that we wanna get settled. And so I would expect a new map program, probably to be unveiled in the spring or summer of next year.

But we are absolutely working on, a, continuing the operating efficiencies that we gained through MAP, We've got 200 or 300 basis points, as I mentioned earlier, of additional improvement in the pipeline on working capital, which will enhance cash flow. And we fully intend to implement a new three year plan And then at some point in the next, call it, six to nine months, figure out, you know, what the appropriate communication on that is externally.

Vincent Andrews: Okay. Thank you.

Operator: The next question is for Ghansham Panjabi with Baird. Please go ahead.

Ghansham Panjabi: Good morning, Ghansham. Good morning. Good morning, Frank. I'm sorry if I missed this, if you already said this already, but what are you embedding for consumer volumes for fiscal year 2026? And how should we think about the sequencing of that in context of doesn't sound like there's much improvement, but you have some from an underlying standpoint, but you have some new products, etcetera?

Frank Sullivan: I think that's right. Rusty can comment on some of the outlook we provided by segment, but we're introducing new products. We're focusing on cleaning as an entirely new category. Along with our small project paints and spray paints, caulks and sealants, abrasives. So we've got a we're broadening the breadth of the product categories that we're involved in very deliberately. Introducing new products, And I think when you look at our performance versus our performance by itself is has been flat to down for eight quarters in a row in terms of volume, not a happy thing.

But to their credit, we have performed at or better than many of our peers in terms of what's been a very difficult environment.

Rusty Gordon: Yes, that's right. I would say that if you look at the outlook for depot and Lowe's and the performance of our biggest competitors at those two accounts, I think our results hold up pretty well. We are not expecting a lot of growth. But like Frank says, we try to outrun it with innovation and bringing new products and new platforms to the retailers. And so one last comment I'd make there is that Pig Stuff's a real dynamic brand. It gets us into new channels, but there's things in cooperation with Rust Oleum that we could do to accelerate The US growth of that brand. Ready Seal, great business, great franchise.

In partnership with Rust Oleum, things that we can do to accelerate organic growth of that acquired business beyond what they could do on their own. And so acquisitions will also play into improved results for our consumer segment.

Ghansham Panjabi: Got it. Thanks for that, Frank. And just one final one. Obviously, your guidance for fiscal year twenty six sales low to mid single digits and then significant operating leverage on EBIT, almost 2x that. Is that a function of your confidence that the volume outlook is better for the company? You know, perhaps versus your thoughts coming into fiscal year twenty five? Or is it on the cost side that you have a lot of confidence on? Or both? How would you have us think about that?

Frank Sullivan: Sure. It's a mostly a function of our efforts throughout fiscal twenty five, mostly internally, although I referenced this on a couple of our calls. To pivot to growth We've spent seven years not only, executing the MAP initiatives, consolidating production, bringing lean manufacturing disciplines on an effective and sustainable basis into our operations, working on what was an obvious opportunity to improve cash flow with better working capital performance. But the cultural shift that we've made to greater collaboration and to a leadership level that thinks as much about our as they do their individual businesses.

And then really a pivot to growth to really focus on how can we allocate more dollars to what's working and be a little more deliberate that way. Leads us to believe that we'll be able to generate a year of organic growth in the two to 3% range complemented by acquisition activity complemented at least in the first part of the year by some additional price. And as we start the year, some favorable FX. So there's a, you know, a lot of things that are lining up as we sit here today. I would just caveat that with the two dynamics I mentioned earlier. Certainty, finality around this tariff issue seems to be in sight. Who knows?

And so if that gets worse instead of better, that could temper all of this. And at some point, the worm is going to turn for the consumer DIY. Because while we're looking at m and a and while we're introducing new products, the negative performance in the DIY markets broadly is existed for almost eight quarters and we've never seen that before. And eventually, the broader economic dynamics there, I think, will improve. Couldn't tell you when, but when does happen, we'll be ready.

Ghansham Panjabi: Thank you so much.

Operator: The next question is from Jeffrey Zekauskas with JPMorgan. Please go ahead.

Jeffrey Zekauskas: Good morning, Jeff. Hi, good morning. You expect your EBIT to grow roughly 10% next year? Do you think of that as about half from acquisition benefits and half from organic and other factors?

Frank Sullivan: I'm not sure I would cut it. I can tell you from a revenue perspective, it will be about half acquisition and half organic growth. And so I suppose that you could think of EBIT growing that way. As we get into quarter by quarter, it will really be a balance of how those acquisitions grow, what we can do with them, also how organic growth leverages to our bottom line. If we get to the high end of our range, it's we will be generating better unit volume growth. Than we anticipate. And if that happens, you'll see a nice leverage from our core operations.

Jeffrey Zekauskas: And then in the quarter, your cost of goods sold went up a little bit less than 2%. And your revenues went up I don't know, 3.7. So cost of goods sold rose less than revenues. And really, a lot of your revenue growth was acquisitions and organic volume. And, you know, you talked about raw materials being higher cost inflation for employees being higher. How did you achieve the lower rate of cost of goods sales growth And did you say how much the MAP initiative helped for this year?

Rusty Gordon: Sure. Yeah. We in terms of the MAP initiatives, we've been running roughly throughout the program at about $100 million a year run rate for incremental MAP initiatives. And Jeff, what was your question on?

Frank Sullivan: While Rusty's looking at that, the in the MAP initiatives, you know, you're looking at meaningfully improved conversion cost both from consolidating production and closing plants as well as introducing lean manufacturing discipline that are driving a higher level of throughput. And so all those have been meaningful in terms of our gross margin improvement. Some of it, Jeff, is driven dramatically by mix. And, you know, across RPM, we could spend hours on this, I'll just give you one good example in terms of where mix improves gross margin in ways that has nothing to do with raw material costs. In our roofing business, we have a straight material component and then our WTI contracting component.

And while their EBIT contributions are roughly equal, the gross margin in our material sales is dramatically higher than the gross margin in our WTI contracting business, which is lower than RPM's average. So construction products, roofing, the mix between WTI contracting and material can drive a meaningful difference in gross profitability the segment level and then marginally for RPM. So lot of moving factors in that question.

Jeffrey Zekauskas: Okay. Great. Thank you so much.

Operator: The next question is from Aleksey Yefremov with KeyBanc Capital Markets. Please go ahead.

Aleksey Yefremov: Good morning. Good morning. Fiberglass grew 20% this quarter. Can you keep growing in this range in fiscal 'twenty six? And could you size this business for us? Please?

Frank Sullivan: Sure. I don't know the specific detail on that. I don't know that we've disclosed a specific fiber grade growth rate, but I can tell you that our fiber grade business has been growing. It's it's part of our performance coatings group. It's been growing at a level higher than RPM, most certainly in double digits. A lot of it is the benefits of some acquisitions in the past. We put Bison with our fiber grade business. That's the rooftop decking, commercial decking. We acquired a business in the middle of the year in Europe, which is the Bison of Europe. Called TMP Convert. And they do a lot of DIY stuff, but also commercial.

But, organically, we're also seeing really strong growth. That business has benefited most from data centers of any of the businesses that RPM because of the nonconductive nature versus steel of their products. And our team's ability to meet the specifications and the speed requirements once these things start in terms of construction. So it's been a real bright star for us both in terms of acquisition growing that business from what was predominantly a U. S. Business to something more global. Entering into DIY, actually, through a partnership with our DAP business, And then also broadly not only organic growth, but their benefit in the data center activity.

Aleksey Yefremov: Thanks, Frank.

Operator: The next question is from Arun Viswanathan with RBC Capital Markets. Please go ahead.

Arun Viswanathan: Good morning, Arun. Arun, your line is open on our end, perhaps you haven't muted.

Arun Viswanathan: Apologies for that, guys. I was on mute there. Sorry about that. Yes, congrats on the strong results. Maybe I'll just ask one question on the MAP savings. So for a little while there, Frank, I think you were alluding to the fact that you guys had taken out a lot of costs. But unfortunately, the volume environment was such that you couldn't really the benefits drop to the bottom line. You are starting to see that now. Margins are obviously rising in the right direction. But maybe you can just comment on how much more margin growth you expect to see if you do kind of hit that mid single digit organic growth that you just spoke about.

And if any leverage that would come from the acquisitions as well? Thanks. And how much I e, how much more, improvement in margins we could expect over the next little while? Thanks.

Frank Sullivan: Sure. I appreciate that question. So, as most on this call knows, we've been talking about a 16% EBIT margin since the fall of twenty eighteen. And our efforts to attain that had been interrupted by COVID, chain, supply chain challenges, inflation, you name it. But it is still a target that is very deeply embedded within RPM. Think if you try and average out all the crazy volatility that the whole world and certainly business has been through in the last seven or eight years. We've been able to sustain about a 40 or 50 basis point improvement in margin year by year.

And I fully expect over the next two or three years that we're gonna get to that 16% market margin target. It didn't come as quickly as we wanted, but it's still front of mind still has some incentive compensation tied to it. And it's still a goal that we expect to achieve. We will not get to a 16% EBIT margin in fiscal twenty six, but we'll make progress.

Arun Viswanathan: Thanks for that, Frank. And then just one more quick one if I could. You know, you guys have often noted M and A as maybe a principal area for capital allocation. But that's been a focus mostly on bolt ons. Is that still the expectation that we should expect you guys to kinda head in that direction, or would you consider larger deals and maybe some adjacencies into, say, more gallon oriented paint. Maybe you can just offer your thoughts on where you're headed M and A wise? Thanks.

Frank Sullivan: Sure. I think the pink stuff is a good example of opportunities that we see that are in adjacencies or new product categories that fit with some of our strengths. And so we're very excited to be a bigger player in the cleaner space. Our consumer group. So we will continue to look for acquisitions like that are a little more sizable than what we've done in the past. But the pipeline for bolt on is pretty good. And particularly in places like our construction products group where they're out looking for components they can add to these system sales.

We'll continue to go look for 10 and $50 million product lines that not only help us complete that more complete wall system sale or additions to asset management, but where we think that our sales force can double or triple the revenues in relatively short period of time, And so hopefully, Dan answers your question. You know, we don't see paying huge multiples for billion dollar deals. But where there are 4 and $500 million nice sized businesses, like the Pink Stuff acquisition, we're gonna go after them. And in the meantime, the bolt on pipeline's pretty good.

Arun Viswanathan: Thanks a lot.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Frank Sullivan for any closing remarks.

Frank Sullivan: Thank you to everybody for your participation on our investor call today. With our fiscal calendar, we have the opportunity to celebrate the New Year twice at RPM. And so I would like to wish everybody a happy RPM New Year. And we look forward to talking to you about our 26 results in October when we report our first quarter results in have our annual meeting of stockholders. Thank you and have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Key Points

• Ripple is gaining regulatory and industry buy-in.

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Is Ripple gaining regulatory and industry buy-in?

The biggest cause of Ripple's recent price surge has been growing optimism surrounding the regulatory environment, as well as encouraging signs of potential industry adoption.

For years, Ripple has faced a long list of regulatory and adoption challenges. From a regulatory standpoint, the project has been involved in a lawsuit by the Securities and Exchange Commission (SEC), which charges it with selling unregistered securities in the coin lauch. After roughly five years, the case was finally settled for $50 million in May, unburdening the project from one of its biggest valuation drags.

From an industry buy-in standpoint, the project has long struggled to attract top-tier banks to its novel system of cross-border transactions. That remains a long-term challenge, but ongoing adoption by global banks, including Travelex Bank in Brazil, Axis Bank in India, UnionBank in the Philippines, ChinaBank, and Qatar National Bank, has provided real-world validation of Ripple's network. Partnerships with local banks help the Ripple team make their services easy to use.

The cross-border transactions market is already worth around $200 trillion today. By the end of the decade, its value is expected to approach $300 trillion. Ripple is clearly competing in a gigantic market -- one of the largest total addressable markets in the world. Adoption and regulatory approval have long been the challenge. But improving conditions this year for both of those categories have investors increasingly excited.

Buy Ripple today if you fit this one characteristic

Do improving conditions make Ripple a buy today? For many investors, the answer is yes. In fact, Ripple could be a buy as long as it's under $10. At $10, Ripple would have a $600 billion market cap. That's justifiable, assuming Ripple takes only a few percentage points off the market shares of various global payment networks.

The SWIFT network, for example, handles more than $5 trillion in transactions per day. Capturing just 1% of this volume would result in roughly $18 trillion in annual volume for Ripple. At that rate, Ripple would likely be worth significantly more than $10.

If you're an aggressive growth investor seeking maximum upside potential, Ripple looks like a buy at under $10. But if you're looking for a more balanced risk-versus-reward scenario, it's best to look elsewhere. That's because the global payments system is highly consolidated, as SWIFT's massive volumes show.

Financial institutions have long been wary of competing systems and are unlikely to switch en masse to a relatively unproven system like Ripple, even if Ripple's network is superior on paper. Additionally, there is growing competition for alternative payment networks such as Visa's B2B Connect and JPMorgan's Onyx platform.

From a fundamentals perspective, it's still far too early to nail down a fair valuation for Ripple. It remains a very speculative asset. There's huge upside to be sure, but if and when that upside is realized, as well as its ultimate magnitude, is difficult to predict.

Aggressive growth investors should strongly consider a small exposure to Ripple. Most investors, however, are better off elsewhere.

Should you invest $1,000 in XRP right now?

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JPMorgan Chase is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, Visa, and XRP. The Motley Fool has a disclosure policy.

JPMorgan Chase & Co.(NYSE:JPM) reported second quarter 2025 earnings on July 15, posting net income of $15 billion, earning per share (EPS) of $5.24, revenue of $45.7 billion, and a return on tangible common equity (ROTCE) of 21%.

Dividend guidance was raised to $1.50 per share for Q3, while full-year guidance for net interest income, or NII (ex-markets), increased to $92 billion, reflecting growth in card balances.

This analysis highlights three distinct strategic and operational developments with outsized implications for the long-term investment thesis.

Capital Allocation Flexibility and Strategic Deal Discipline

During the quarter, the Common Equity Tier 1 (CET1) ratio declined by 40 basis points to 15%, as capital distributions and higher risk-weighted assets (RWA) outpaced net income generation. Management indicated both organic and inorganic growth remain under consideration for capital deployment, with inorganic opportunities subject to a disciplined financial and strategic screen, providing headroom for diverse capital uses.

"So know, we deploy our capital against organic and inorganic growth. And we ensure a sustainable dividend. And with what's left, we do buybacks. It is a big amount of excess, and that does mean that everything is on the table as it always is. And that includes potentially inorganic things. Acquisitions have a high bar both financially strategically, and importantly, in some cases, culturally. I don't particularly think, other than fundamentally whether things are permissible or not. That the regulatory environment right now particularly shapes our thinking on that front."
— Jeremy Barnum, Chief Financial Officer

JPMorgan Chase's significant surplus capital and nuanced approach to M&A signal the potential for targeted acquisitions, but with high selectivity, which reduces the likelihood of value-destructive deals and supports disciplined capital returns.

Market Leadership and Robust Fee-Based Revenue Expansion

The Commercial & Investment Bank (CIB) division delivered $6.7 billion in net income on revenue of $19.5 billion. Revenue for this segment was up 9% year over year; investment banking fees increased 7% year on year, while markets revenue surged 15%, driven by a 14% increase in fixed income and a 15% rise in equities. The firm continues to lead with an 8.9% wallet share among global investment banks, and average client deposits rose 16% year over year, supported by healthy activity in payments and securities services.

"IB fees were up 7% year on year continue to rank number one with wallet share of 8.9%. Advisory fees were up 8%, benefiting from increased sponsor activity. Debt underwriting fees were up 12%, primarily driven by a few large deals. In equity underwriting, fees were down 6% year on year. Our pipeline remains robust and the outlook along with the market is notably more upbeat. Payments revenue was up 3% year on year, excluding equity investments, driven by higher deposit balances and fee growth, predominantly offset by deposit margin compression. compression. Funding revenue was down 6% year over year, reflecting higher losses on hedges. Moving to markets, total revenue was up 15% year on year for Q2 2025. Fixed income was up 14% with improved performance in overseas and emerging markets, rates commodities. This was partially offset by fewer opportunities in securitized products and fixed income financing. Equities was up 15%, continue to see strong performance across products, most notably in derivatives."
— Jeremy Barnum, Chief Financial Officer

This breadth of double-digit growth across several noninterest income categories and sustained market leadership reinforces earnings diversification throughout economic cycles.

Digital Strategy, Payments Innovation, and Stablecoin Engagement

Net inflows in Asset & Wealth Management totaled $31 billion. Assets under management (AUM) grew 18% year over year, to $4.3 trillion, and deposits rose 9% over the same timeframe. Management articulated an intent to compete with both stablecoins and fintechs while advocating for customer-oriented data sharing and pricing frameworks in open banking.

"We're going to be involved in both JPMorgan deposit coin and stablecoins to understand and to be good at it."
— Jeremy Barnum, Chief Financial Officer

By directly engaging in digital asset infrastructure and remaining at the forefront of payments innovation, JPMorgan Chase targets resilience against fintech disintermediation risks and positions itself to influence, and potentially shape, future industry standards for digital finance and open banking.

Looking Ahead

Management raised net interest income guidance (ex-markets), to approximately $92 billion, and total NII guidance to $95.5 billion. On an adjusted expense-basis, guidance was revised upward to $95.5 billion, primarily due to currency fluctuations, but it was described as largely neutral to the bottom line.

Card net charge-off rates are expected to be approximately 3.6%, and the board intends to increase the quarterly dividend to $1.50 per share starting in Q3.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,053%* — a market-crushing outperformance compared to 180% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of July 14, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

In this podcast, Motley Fool analyst Jason Moser and contributor Lou Whiteman discuss:

• Starbucks' move to sell part of its China business.
• Hershey hires a new CEO.
• Meta moves for more talent and invests in eyewear.
• What should be on investors' radar this earnings season.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

A full transcript is below.

Should you invest $1,000 in Starbucks right now?

Before you buy stock in Starbucks, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Starbucks wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

Now, it’s worth noting Stock Advisor’s total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

This podcast was recorded on July 09, 2025.

Jason Moser: Starbucks pivots in China and Meta makes some big investments. You're listening to Motley Fool Money. Welcome to Motley Fool Money. I'm Jason Moser, joining me today. It's Motley Fool analysts Lou Whiteman. Lou, thanks for being here.

Lou Whiteman: Great to be seen.

Jason Moser: On today's show, Hershey has a new CEO. Meta is making some big investments in AI, and earning season is, believe it or not, right around the corner. But today, we begin with the king of coffee. Reports are that Starbucks has garnered quite a bit of interest in its China business, as it looks possibly selling a majority stake in that business. The company said, "We remain committed to China and want to retain a meaningful stake in the business. Any deal must make sense for Starbucks business and partners." Lou, China has been a bit of a challenge for Starbucks as of late. Do you think this is the right move to try to sell the majority stake in this business?

Lou Whiteman: I do. I like this a lot. New CEO Brian Niccol, he's got a lot on his plate. He's articulated a plan, the back to Starbucks. He's going to revitalize to domestic business. But look, it's going to take time, it's going to take resources. Finding a partner to work with China, it would allow Starbucks to retain some of the upside, but it is a massive market. I get it. But it would provide a cash infusion and take one thing off that plate off of that daily agenda. It feels like a win-win.

Jason Moser: It seems like there was a lot of interest. Something close to 30 equity firms and whatnot actually submit it.

Lou Whiteman: Big money?

Jason Moser: Yeah, big money, valuing it anywhere from, 5-$10 billion, I saw. You talk about the growth opportunity in China, and that's been part of the story. I think with Starbucks for many of us for many years, it's not to say they haven't grown there. They have almost 8,000 stores in China to date. But, they're talking about really going so far beyond that. It's 10% of overall revenue right now. It's meaningful, but it seems like it could be more meaningful. How big do you think they can grow as part of the business?

Lou Whiteman: They talk about 20,000 locations, which is more than double. That, honestly, I don't know about that. That's part of why I think I'm OK with them at least finding a partner or keeping some upside, but not all of it. I think the Chinese consumer, like the American consumer and most other consumers, I think they're going to lean into domestic brands over international ones as that market matures. I think to some extent, it's happening. Maybe refocusing the operations, finding a partner, growing that way and doing it, not just rubber stamping what Starbucks is here. I think there's probably room for growth, but I don't think maybe it's what we were talking about a few years ago, and I don't think it's priority one right now for them, either.

Jason Moser: This seems like a little bit like history repeating itself. You remember in the early days when they were growing internationally, and they had, in most places, they were taking that company owned approach to the stores. Then, it turns out not every country is the same, Lou, and the cultural clashes, the differences, it was all very different in so many different ways, in so many different locations. They pivoted to partnering up with local partners in those respective markets. I'm with you. I think this is a good move. I actually like it. I think it gives them the opportunity to participate in the upside without having to devote so many resources to it. I like the decision. I feel like this is something that Niccol has been mulling around for a while. I'd be curious to know. He's closing in on a year in September with the company. What grade would you give Brian Niccol today?

Lou Whiteman: Forget what I think. [LAUGHTER] Howard Schultz seems bought in. I think we can all agree. Howard's very smart and also can be a meddler. I think Howard Schultz giving him an A is very important. But I don't think Howard's wrong. I think Niccol's plan to refocus Starbucks give us back the experience we fell in love with and also adjust the menu, so we're not waiting in line for 40 minutes in the drive through. It all makes sense. It's a strong grade, it's an incomplete grade because it's one thing to say it. We have to execute and do it. But I like where they're going with.

Jason Moser: The stock is basically flat since Niccol took over, or you think it's just a couple of percentage points. But it still boasts a premium multiple at 34 times earnings, do you think this stock from to date, do you think this is an outperformer in the coming five years?

Lou Whiteman: I think so. I'll be honest. The valuation gives me pause. I don't think it's going to be, I think maybe the hypergrowth days are over. But look, the brand resonates. I think you'll see operational improvements under Niccol which will boost results. You have, what, 2.5% dividend yield to boost your total return. Yeah, maybe it isn't what the growth was before, but it still, I think, has the bones of a market beater of just a top operator.

Jason Moser: Yeah, I'm with you. I'm hanging on in my shares too. Well, next up, Hershey has a new CEO.

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Jason Moser: Hershey Company has a new CEO, Wendy's CEO Kirk Tanner will replace Michele Buck, who's retiring after almost eight years as CEO of the company. Tanner will take over on August 18th and previously served over 30 years at Pepsi. Lou, I was talking with our colleague, Ant Schiavone, who follows Hershey closely. He said that while Tanner definitely has the resume to be CEO with those three decades at PepsiCo., and he had a short stint at Wendy's, it started in February 2024. It was a bit shaky. Shares down around 40% during his tenure. They had to cut the dividend earlier this year. The Ant noted that was likely to happen regardless who was CEO. What do you think his biggest challenge right off the bat is going to be taking over for such a, I mean, this is just a legendary, iconic American brand. They're going through some tough times. What do you think the biggest challenge he's facing us?

Lou Whiteman: A brand that has always or mostly promoted from within, too, which I think is interesting, too. I think you said it well. It's hard to judge the time at Wendy's, both because it was so short and he did step in at a difficult time. But it feels like Hershey's is more similar to what he did at Pepsi and he was successful there. Wendy's is more retail focused. I think that's a positive. I suspect his biggest challenge is to continue the pivoted way from chocolate, from cocoa prices. Hershey's has quietly built up this roster.

Jason Moser: What?

Lou Whiteman: Pirate Booties, Dot's Pretzels, SkinnyPop. It feels like there's further opportunities to go in that direction, and bringing someone in from Pepsi suggests to me, at least that that's where the board is focused. That's his challenges to execute there and make that happen.

Jason Moser: I think you're right. You got to broaden that portfolio because we've seen this over the last several quarters, years, the cocoa prices have really been hammering Hershey, and it's always fun to pay attention during Halloween to see what candy he's selling. Last year, we definitely saw a trend toward, like, the fruity, sugary candies, chocolate, a little bit less so because it was getting more expensive. Then the dreaded shrinkflation came into play. They're making the candy bar smaller Lou. Not cool, but I guess I get it.

Lou Whiteman: Hey, my doctor likes it, even if I don't.

Jason Moser: Exactly. We talked about Brian Niccol. Now we're talking about Hershey here with Kirk Tanner. When you see new leadership in play here, how long do you typically give new leadership to start delivering?

Lou Whiteman: It's so hard, because obviously, every situation is different. You have to factor in macro, what situation does a new leader drop into. But look, generally, I think, at least a year, we talk about this a lot. We're long term focused investors. We understand that quarter to quarter fluctuations happen, and they're part of the business, and we don't panic. We don't freak out with one quarter. We don't get too excited. I think we have to give leadership the same understanding, the same philosophy. In a case like this the challenges, the consumer, cocoa prices, perhaps maybe you need more time, but I'll tell you what I do want Jamo and what I'd like to see is within a year, what Niccol gave us, I want to hear our leadership articulate a plan. I want something I can evaluate from here. You may not be able to solve the problem in a year, but I want to hear how you're planning on doing it within a year.

Jason Moser: I like that. One of Tanner's go to moves at Wendy's was offbeat collaborations. They did a Girl Scout thin mint frost Deep. Tried that one, it was good. Spicy Taki chip chicken sandwiches. Hey, man, I love Takis and I love chicken sandwiches.

Lou Whiteman: I don't love that.

Jason Moser: Sponge Bob brand and burgers. Let's play armchair CEO for a second. What brand collaboration would you recommend for Hershey's?

Lou Whiteman: The company that brought us peanut butter and chocolate, [LAUGHTER] they have to get collaborations. This is a no brainer, but I love Dot's Pretzels. Looking at the website, they have cinnamon season. They have barbecue. They have honey mustard. They don't have chocolate covered pretzels.

Jason Moser: That crossed my mind.

Lou Whiteman: It seems so obvious.

Jason Moser: I have more of a salt tooth than a sweet tooth. I was thinking, I love Dot's Pretzels. I have in the pantry at home. I also like SkinnyPop. That's pretty good stuff. I was thinking, Hey, you get SkinnyPop and you partner up with McCormick for some old bay SkinnyPop? You can cheat and put the stuff on at home, but I guarantee the stuff in the bag is going to be way better. You're bringing two worlds together right there. I'd be all in.

Lou Whiteman: My Baltimore roots are speaking to me right now. [LAUGHTER] I'm in for that. Mr. Tanner, get on that.

Jason Moser: Last question on Hershey, do you think Tanner is still here in five years?

Lou Whiteman: I do. I do think fit matters, and I think the resume implies a better fit, like we said. To use the Willy Wonka, I think maybe this is a golden ticket, and I think it can work out well for Tanner and for Hershey shareholders.

Jason Moser: Lou Meta continues to make big investments in AI. Founder and CEO Mark Zuckerberg is spending big to recruit AI talent. We're talking tens, hundreds of millions of dollars from reports. Now we also saw that the company's taking a minority stake in Ray-Ban maker Es Luxottica, and that really plays into these Ray-Ban AI glasses that they're starting to get out there. I'll be interested to see how this holiday season, how those are received. Now, as we saw with the Metaverse, Zuckerberg's playbook is to go big or go home, $3.5 billion investment in Ray-Ban, reportedly hundreds of millions of dollars in recruiting bonuses. that's a lot. What should investors make of all the spending?

Lou Whiteman: Usually I find interesting back in January, Meta committed to, what, spending $70 billion in CapEX, mostly to build out AI. Our focus was on chips at the time. Certainly Invidia is getting a lot of love here. But, it feels like we're kidding that next step, where, what do we do with all that capacity, making the magic happen? Look, if you think chips are hard to come by and they are, just how hard is it going to be to get the right talent and the right partners and all of that. I think be aggressive makes sense. Zuckerberg likes to be aggressive, but focus on the big picture of try and be a first mover here. I get what they're doing, and I think it makes sense, because at some point, we got to use all these chips or something, and it better be neat.

Jason Moser: Yeah, this is an arms race like we haven't seen in some time. All these companies is just foot on the gas, and they're spending a lot, but clearly, that's telling us something. I think we're in the middle of something big here. Now, the Metaverse spending, that led to the year of efficiency, if you remember that. Investors became worried about return on investment, do you see this playing out the same way or like, how long of a leash does Meta have here to ultimately build out their AO chops and demonstrate real return?

Lou Whiteman: I'm curious what you think. I think here the difference is last time they were out on their own. They literally changed their name to Meta. They were the Metaverse island. For better or for worse, it ended up worse. They owned that space, and there's a lot more there with AI, I think.

Jason Moser: I agree.

Lou Whiteman: If there's not, we have a lot of people going along for the ride. I think as long as everyone else is spending, I think it's a much longer leash.

Jason Moser: I think so, too. I think you said it perfectly. There's a there there. AI, it just seems so much bigger. When we're looking at augmented and virtual reality in the Metaverse, it's fascinating technology, but it certainly is more niche, and it's really not quite developed. The obvious use cases that we're seeing play out with AI. The stock, let's talk about the stock. It's had a good year to date. It's up almost 25%, outperforming the market nicely. At around 28 times earnings today, is this something you're interested in? Do you think this is an outperformer over the next five years at today's levels?

Lou Whiteman: So 28 times earnings. What? That's second most affordable among the Mac 7, which for what it is. But look, for all the talk about AI, we you bury the lead when you don't talk about that core advertising business and its ability to just generate. I'm excited about AI, but I just that core business, I don't see a disruption on the horizon here, and with that business, I think the stock beats to market. That is the engine.

Jason Moser: I think AI is really ultimately making that core business even better. That really is the point. they're going to do ancillary stuff with it. But it is making that core business better, and man, they really own a big slice of that ad market, like you said. Next up, earning season is right around the corner. Lou, believe it or not, earnings season is upon us again. JP Morgan unofficially kicks things off on Tuesday, July 15th. What's something that you'll be paying close attention to this earning season? A trend, policy, specific company, and industry? What you got.

Lou Whiteman: We just talked about Meta's year of efficiency. If we want to talk about so far this year, and we're still early into this year. It has been the year of uncertainty, for public companies. Investors largely gave management teams a pass last quarter when they said, I don't know when it comes to guidance. I think that's understandable. I was one of those investors who, I don't know what's going on either, so that's fine. Two related big picture questions I have as I'm watching now is, A, is there more clarity now than there was three months ago? Is there more management teams that are willing to stick their neck out? Since I'm guessing the answer is maybe not, will investors continue to be patient? Will the 'I don't know answer', will that be acceptable now the way it was last quarter? I think, probably, but I'm curious to see how things play out just kind of. We're always forward looking. As investors, it's scary when there's clouds forward. It's a weird time. How about you.

Jason Moser: Well, I think in regard to your points there, two. We're seeing a lot of headlines coming out here again, regarding tariffs. It's leading right in earnings season. It would be understandable if you hear that uncertainty language. But I don't know, do you feel like folks are just getting tariff exhaustion. Like, it's just day after day, so you know that it's happening, and at some point, you just got to let it go and keep running your business.

Lou Whiteman: Yeah, it feels like it's going to net out as a drag on earnings indefinitely that we're just going to have to grin and bear it with, which is a terrible medium because it's just going to be a slog, unfortunately.

Jason Moser: Well, you asked what I was looking at, and for me, it's in regard to enterprise spending trends, over the last several quarters, there's a phrase that we've seen on a lot of these earnings calls, whether it's Twilio or Cloudflare or CrowdStrike, Palo Alto. You name it. These big enterprise servers, the phrase elongated sales cycles, to your point about uncertainty. Their enterprise customers are just simply not quite certain what the future holds. They're spending with some trepidation and maybe not fully committing. We saw just elongated sales cycles on so many earnings calls over the last several quarters. I wonder if that's starting to come to a close. I wonder if we're going to start seeing some more bold spending from a lot of these big enterprises. I'm going to be following a lot of those companies like I just mentioned, those earnings calls, and that will be one key term that I'll be searching through all those calls, elongated sales cycles. That's just telling you, they're just not spending as much as quickly, and we want to see that turnaround.

Lou Whiteman: It's a great point because putting it both together, there is so much uncertainty. It's understandable not to want to make bold moves, but at some point, business has to go on. Where are we in balancing that? That's going to be fascinating to say.

Jason Moser: Well, we'll leave it there. Lou Whiteman, thanks again for being here.

Lou Whiteman: Always a pleasure.

Jason Moser: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. Advertisements or sponsored content are provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. I'm Jason Moser. Thanks for listening. Will see you.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Jason Moser has positions in McCormick, Starbucks, and Twilio. Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Hershey, JPMorgan Chase, Meta Platforms, Starbucks, and Twilio. The Motley Fool recommends McCormick and Palo Alto Networks. The Motley Fool has a disclosure policy.

Key Points

• This year's edition of the Federal Reserve's bank stress test saw all tested institutions pass.

• Although Citizens didn't have to participate, it benefited from the positive results.

• The company also substantially added to its existing share repurchase initiative.

A seriously bulked-up share repurchase plan and good results of the Federal Reserve's latest banking industry stress test improved the share price of regional lender Citizens Financial Group (NYSE: CFG) in June. Over the course of the month, investors traded the bank's stock up by nearly 11% in reaction to this.

Not so stressed

The rally basically started in the middle of the month, when Citizens announced that stock buyback news. To the satisfaction of its shareholders, the company said it would bolster the existing program by a hefty $1.2 billion. As there was $300 million remaining from the previous authorization, granted in June 2024, the new total is $1.5 billion.

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For a stock with a sub-$21 billion market cap, that's substantial, and it should have a positive impact on the share price.

A more critical, industrywide development occurred at the end of the month with the stress tests. For those unfamiliar, these are an annual set of analyses in which major U.S. banks are tested to see how they would weather adverse economic conditions, some of which are quite drastic.

As has become the norm, the institutions under the microscope -- which include the "big four" American lenders, Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup -- did quite well. All 22 passed their tests, albeit with the caveat that this year's edition was less rigorous than previous rounds.

Citizens Financial isn't sizable enough to go through this wringer annually, instead it's tested every two years, and in 2025 it got a break. Still, there were several regional banks not unlike itself among the 22 tested. All in all, the good results were taken to mean that mid- and large-sized banks in this country are generally doing well, and in the worst-case scenarios can probably cope with catastrophe.

A good Citizen?

I don't blame investors of Citizens Financial -- or any other bank of its size on this market -- for reacting positively to the stress test results. Despite some cuts and scrapes lately, our economy has been performing well, and the smart and disciplined approach of its better lenders is an ever-important factor in this.

Having said that, I'm not all that excited about Citizen Financial's performance recently. In its first quarter revenue was essentially stagnant, as was the company's end-quarter deposits figure. And average loans and leases slumped, even as a bump in non-interest income pushed headline net profit 12% higher to $374 million. To me, it's the larger banks that have better potential these days.

Should you invest $1,000 in Citizens Financial Group right now?

Before you buy stock in Citizens Financial Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Citizens Financial Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy.

Key Points

• SCHD and GCOW focus on higher-yielding dividend stocks.

• The ETFs have different strategies for selecting those stocks.

• They also have different fees and return profiles.

Many exchange-traded funds (ETFs) focus on holding dividend-paying stocks. While that gives income-seeking investors lots of options, it can make it difficult to know which is the best one to buy.

The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) and Pacer Global Cash Cows Dividend ETF (NYSEMKT: GCOW) are two notable dividend ETFs. Here's a look at which is the better one to buy for those seeking to generate passive income.

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Different strategies for selecting high-yielding dividend stocks

The Schwab U.S. Dividend Equity ETF and the Pacer Global Cash Cows Dividend ETF aim to provide their investors with above-average dividend income by holding higher-yielding dividend stocks. The ETFs each hold roughly 100 dividend stocks. However, they use different strategies to select their holdings.

The Schwab U.S. Dividend Equity ETF aims to track the returns of the Dow Jones U.S. Dividend 100 Index. That index screens U.S. dividend stocks based on four quality characteristics:

• Cash flow to debt.
• Return on equity (ROE).
• Indicated dividend yield.
• Five-year dividend growth rate.

The index selects companies that have stronger financial profiles than their peers. That should enable them to deliver sustainable and growing dividends, and the Schwab U.S. Dividend ETF accordingly provides investors with a higher-yielding current dividend that should grow at an above-average rate. At its annual reconstitution, its 100 holdings had an average dividend yield of 3.8% and a five-year dividend growth rate of 8.4%.

The Pacer Global Cash Cows Dividend ETF uses a different strategy for selecting its 100 high-yielding dividend stocks. It starts by screening the 1,000 stocks in the FTSE Developed Large-Cap Index for the 300 companies with the highest free cash flow yield over the past 12 months. It screens those stocks for the 100 highest dividend yields. It then weights those 100 companies in the fund from highest yield to lowest, capping its top holding at 2%. At its last rebalance, which it does twice a year, its 100 holdings had an average free cash flow yield of 6.3% and a dividend yield of 5%.

Here's a look at how the top holdings of these ETFs currently compare:

SCHD	GCOW
ConocoPhillips, 4.4%	Phillip Morris, 2.6%
Cisco Systems, 4.3%	Engie, 2.6%
Texas Instruments, 4.2%	British American Tobacco, 2.4%
Altria Group, 4.2%	Equinor, 2.2%
Coca-Cola, 4.1%	Gilead Sciences, 2.2%
Chevron, 4.1%	Nestle, 2.2%
Lockheed Martin, 4.1%	AT&T, 2.2%
Verizon, 4.1%	Novartis, 2.1%
Amgen, 3.8%	Shell, 2.1%
Home Depot, 3.8%	BP, 2%

Data sources: Schwab and Pacer.

Given their different strategies for selecting dividend stocks, the funds have very different holdings. SCHD holds only companies with headquarters in the U.S., while GCOW takes a global approach. U.S. stocks make up less than 25% of its holdings. Meanwhile, SCHD weights its holdings based on their dividend quality, while GCOW weights them based on dividend yield. Given its focus on yield, GCOW offers investors a higher current income yield at 4.2%, compared with 3.9% for SCHD.

Costs and returns

While SCHD and GCOW focus on higher-yielding dividend stocks, their strategies in selecting holdings have a major impact beyond the current dividend income. Because SCHD is a passively managed ETF while GCOW is an actively managed fund, SCHD has a much lower ETF expense ratio than GCOW. SCHD's is just 0.06%, compared with GCOW's 0.6%. Put another way, every $10,000 invested would incur $60 in management fees each year if invested in GCOW, compared with only $6 in SCHD.

GCOW's higher fee really eats into the income the fund generates, which affects its returns over the long term. The fund's current holdings actually have a 4.7% dividend yield, whereas the fund's latest payout had only a 4.2% implied yield.

ETF	1-Year	3-Year	5-Year	10-Year	Since Inception
GCOW	11.2%	8.4%	15.5%	N/A	8.8%
SCHD	3.8%	3.7%	12.2%	10.6%	12.2%

Data sources: Pacer and Schwab. Note: GCOW's inception date is 2/22/16, while SCHD's is 10/20/11.

GCOW has outperformed SCHD over the past five years. However, SCHD has delivered better performance over the longer term. That's due to its lower costs and focus on companies that grow their dividends, which tend to produce the highest total returns over the long term.

SCHD is a better ETF for passive income

SCHD and GCOW hold higher-yielding dividend stocks, making either ETF ideal for those seeking passive income. However, SCHD stands out as the better one to buy because of its focus on dividend sustainability and growth. It also has a much lower ETF expense ratio. So it should provide investors with an attractive and growing stream of passive dividend income.

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In this podcast, Motley Fool analysts David Meier and Jason Moser join host Ricky Mulvey to discuss:

• Earnings from CrowdStrike, Lululemon, and Broadcom.
• Elon Musk's feud with President Donald Trump and the impact on Tesla shareholders.
• Docusign's turnaround story.
• Two stocks worth watching: Asana and Amazon.

Stacey Vanek Smith, co-host of Everybody's Business, joins Ricky for a look at the tough job market facing college grads.

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A full transcript is below.

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Ricky Mulvey: It's the Motley Fool Money Radio Show. I'm Ricky Mulvey joining me on the Internet today, it's Motley Fool Senior Analysts, Jason Moser and David Meyer. Fools, great to have you both here.

David Meier: Ricky, it's awesome to be here.

Ricky Mulvey: We've got earnings from CrowdStrike in Lululemon, but I mean, come on, how are we not going to talk about the breakup between Elon Musk and President Trump? First up, though, we're keeping our eye on the ball. We're starting with some economic data before we get to the juicy stuff. J Mo, the unemployment rate stands at 4.2%. While jobs were added above estimates, this report also says that the US added almost 100,000 fewer jobs than estimates thought in the prior two months. Something almost embarrassing, as embarrassing as a vocal crack. I'm seeing headlines that the labor market is softening. I'm seeing headlines that this report is strong. What say you?

Jason Moser: Yeah, this is an economy. There's this duality. The reality of the situation is that things are OK. We've been worried that we're standing on a cliff here as of late, but employment, yes, it slowed down a little bit. Wage growth was there, albeit slower as well. All things put together, things are OK, and we're not close to teetering into a recession it would appear. But then there's this anxiety from consumers, from businesses as we work our way through exactly what the impacts of all of this tariff stuff will ultimately look like and how that could impact business activity. Will it increase inflation? For now, though, things look pretty good. I think the question that I get from this because it seems like everything's OK, it's going to be interesting to see how the Fed reacts to this in the back half of the year. There's a lot of analysts out there that are positing that we probably could see the Fed be a little bit more aggressive with interest rate cuts in the back half of the year, particularly as inflation continues to abate, but it all still hinges on what in the world is going to happen with this tariff talk. That still just remains entirely unclear.

Ricky Mulvey: Traders are optimistic to your point of a recession on the prediction market coal sheet, the odds of a recession this year are at 27%, something that remains surprising to me, since we are coming off a quarter of economic contraction. According to the book, two of those gives you a recession, and we also have fewer ships coming in to the port of Los Angeles. This is a very confusing economic time for any observer. We're going to dive into some jobs trends, tariffs, the economy with Bloomberg's Stacey Vanek Smith later in the show. I'll wrap up the economic talk there and stick with earnings. We're going to focus on the business. Starting with our earnings chatter, we've got CrowdStrike. David, the cybersecurity giant and Fool favorite reported earlier this week. Here's some of the numbers. Total revenue grew to more than one billion dollars. That was a 20% increase from the prior year. 97% gross retention for its services. That's pretty good for a company still coming off in outage. However, investors did not like the guidance going forward. What set out to you in the results?

David Meier: Two things. Almost $200 million of recurring revenue added during the quarter, bringing the total to more than 4.4 billion, and a free cash flow margin of 25%. When I put those two numbers together, that shows me that there's plenty of demand for its products and services, and that the company is generating value from that growth. That is a good report.

Ricky Mulvey: From CEO George Kurtz, he said, "What excites me the most is the necessity agentic AI is creating for CrowdStrike holding Inc's AI native security." If you're going to understand the business and the growth path moving forward, you need to understand the AI agents that this cybersecurity giant is implementing. We'll start here. Why is Kurtz so excited about agentic AI?

David Meier: Yeah, it's actually on the other side that he's excited because AI agents by customers of CrowdStrike, they actually create threat vectors for bad actors. The more agents that are being created and they're being created very quickly right now, the market opportunity is only going up from there. I would also be excited about an increase in a market opportunity of a market where I am a leader.

Ricky Mulvey: I heard a quote on search engine, which is PJ Votes podcast, that basically cybersecurity is the only business that gets worse every single year in technology, because you have so many new threat actors coming in that these businesses are trying to keep up with. Then when you look at the balance sheet here or the financials, CrowdStrike has authorized one billion dollars for share buybacks. This is also a company that likes to issue a lot of stock, and it makes sense. That's how you attract software talent, but how excited should the investors be us on the retail side about this one billion dollars in potential share buybacks?

David Meier: The first thing is, I actually agree with your previous statement. That's the paradox of cybersecurity. It's always needed and always growing because bad actors are always out there. But getting to your question about repurchases at today's prices, I am not excited about that buyback at all. There has to be better ways of investing that money than buying back very expensive shares. I get it, it's about trying to control dilution, but there has to be plenty of things for CrowdStrike to be investing in going forward.

Jason Moser: I'm just going to say, I bet you they really wish they executed this a year ago. It more than doubled since that outage. Like you, Dave, I'm definitely not excited by this, and I bet dollars to doughnuts that there is no way this even remotely brings that share account down. Now, that's not unique. We see that all of the time in this space. Still, it's worth remembering.

Ricky Mulvey: For those listening, you have a few options when you have that extra cash, you can keep that cash on the balance sheet or what's wrong with a special dividend? You can pay a special dividend to your shareholders from time to time if you think your share price is a little high. Other companies do that. J Mo, let's move to Lululemon. Lululemon, the maker of stretchy pants and other fashions, is down about 18% this morning. Man, how bad are tariffs for this business, Jason?

Jason Moser: Stretchy pants. Listen, it is exposed to this tariff environment like most others in its space. Now, I'm not sure that they necessarily have the same exposure. If you look at their 10K, for example, and they quantify their supply chain exposure there, 35% of fabrics originated from Taiwan, 28% from China mainland, and 11% from South Korea. Now, on the flip side of that, the raw materials that they use, things like content labels, elastics, buttons, clasps, draw cords. All of that really essentially originates from Asia Pacific and mostly the China mainland. They do have that exposure there, but they are also working on trying to mitigate that. It'll just remain to be seen how well they could pull that off. But it's worth noting, their inventories at the end of the first quarter were up on a dollar basis, 23%, $1.7 billion versus $1.3 billion a year ago, so definitely something to keep an eye on.

Ricky Mulvey: Well, something that has investors in Lululemon, like me, shaking in our ABC pants is that a lot of this growth is coming internationally. If you're buying shares of Lululemon, you have to recognize that a lot of that sales growth is coming from the mainland of China where it's selling finished products. If you're hanging on to Lululemon stock, you're buying into that story. But right now, Lululemon has gotten absolutely crushed. It's at basically a grocery store earnings multiple, which, to me, says, no growth is ever coming again for this company. What's the market saying about this about Lululemon right now, and maybe what say you?

Jason Moser: You're right about the international growth. China revenue is up 22% versus the Americas up only 2%. CEO Calvin McDonald noted on the call. He said that their sense is that US consumers remain very cautious and are being very intentional about their buying decisions, and that just flows right into discretionary spending and impacts a company like Lululemon. In regard to the multiple, I think the multiple makes sense today. You're right, this thing has gotten crushed, and at around 18 times full-year earnings estimates, that's low, historically speaking. However, it also is because essentially it's pricing and no earnings growth. They essentially are not going to grow earnings this year. So then the question you have to ask yourself is, what does it look like beyond just the year? If you think the company can return back to modest top-line growth and really bringing it down to the bottom line for more robust earnings growth, then today would make a lot of sense as a potential buying opportunity. My sense is the multiple will ultimately be assigned is somewhere in the middle. Eighteen seems low for a company that I think can still grow, but I don't know that I'd be buying this company at 70 times earnings, either.

David Meier: One thing to always remember about Lululemon is that these buyers have discretionary income, and they love this product. So over the long term, that has served the company well.

Ricky Mulvey: After the break, it's the rumble between President Trump, Elon Musk, in the impact on Tesla. Stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Ricky Mulvey here with Motley Fool senior analysts, David Meier and Jason Moser. JMo and David, we talk about businesses a lot on this show, what we don't talk about often is friendship. What we've learned this week is that some friendships don't last forever, and that is the case with Elon Musk and President Donald Trump. If you want the receipts of their beef, you can check out X and Truth Social. But Musk is throwing barbs over the big, beautiful bill in the impacts on the national debt. Turns out, Elon Musk really does care about that and President Trump, of course, likes his bill. During this, I don't even know if you say a fool out fist fight, sparring match, whatever metaphor you want to use, they're not happy with each other. Tesla stock has taken a fall. More than $150 billion gone in market cap in just one trading day. Fools, I'm going to give this to Jason first. What is the most expensive breakup you've ever had?

Jason Moser: Boy, that escalated quickly, and I'm not going to get into my personal life on this show, Ricky. But I think this is given what we know about both people, this seemed inevitable. Who knows what tomorrow brings, but both very strong-willed and probably stubborn as a word that works here, too. The back and forth has been entertaining, I guess. Unless you're a Tesla shareholder. I'm not, but I'd imagine they probably don't really care for these barbs going back and forth. But I think it's important to note that the impact here on Tesla could be significant in regard to the bill. The bill essentially eliminates a credit worth as much as $7,500 for buyers of certain Tesla models and other EVs by the end of the year. According to JP Morgan analysis here. That would translate to roughly 1.2 billion dollar hit to Tesla's full year profit. That's not insignificant. Then you couple that with separate legislation that's been passed by the Senate based on California's EV sales mandates. That's another potential two billion dollar headwind to Tesla's sales according to JP Morgan. You're looking at some legislation here that could have a meaningful impact on the business if it passes in its current form. But then I saw the tweet there from Musk. He was like whatever, let the credit expire. Go ahead and go as is, but fix the rest of the bill. Who knows how this will all shake out, but it's been quite a couple of days.

Ricky Mulvey: I think, once you start accusing the president of being on certain lists and threatening to release those lists, I would guess that he is not going to take your calls anymore. David, I am not going to ask you about your personal life. I'll just assume that you've never had a $150 billion breakup. But Tesla is in a very weird spot right now. Because we have seen what happens when brands get political. Usually, it's brands going to the left. We've now seen it with brands going to the right. Tesla has managed to upset people on both sides. If you like Trump, you may not be happy with Elon Musk right now. If you're on the left, you may not like what he has done when he was in the White House during his one-month tour of DOGE.

Jason Moser: Do you think Tesla can break this trend of brands getting hurt for the long term when they get political?

David Meier: That's a very interesting question. I think the answer is yes, but only if Musk stops focusing [LAUGHTER] on the soap opera, and starts focusing on the things that will drive the future value of Tesla here. What do I mean? Let's get full self driving. Let's get that out. Let's get the cyber cabs out. Let's get progress with the optimist robots. All the things that are going to drive the future value of the company, put your attention there. Stop this nonsense. You work for the shareholders, and you're a huge shareholder. I realize that money may not matter to him, but it does matter to the people that have invested in his company, so he can break the cycle. Get focused on what is important for the future value of the company. Ultimately, I think, at some point he will do that.

Jason Moser: You know what? If I can give him advice if you're both listening. If you got an issue with someone, a phone call is always better. A coffee is always better. It's always tough once you start airing it out on social media. Let's get back to earnings. Let's get back to earnings because maybe the quietest trillion dollar company on the market reported this week, and that is Broadcom. David, revenue rose 20% on the year here. This is an AI fueled growth story that I think not a ton of people are talking about. But what did we learn about the chip business from Broadcom's report this week?

David Meier: We learned that the demand for AI chips remains high and is growing fast. Within its AI semiconductor revenue, that increased 46%, which easily outpaced the entire chip segment that it has a 17% growth. Quite frankly, that's good for Broadcom and anybody supporting that industry.

Jason Moser: Broadcom's chips, we talk about Invidia and the GPUs that allow these, like, AI LLMs to run. Broadcom's chips are more of a connective tissue. They're working in the background doing memory and networking for running these AI workloads. Their customers include the big tech companies we talk about more often on the show. For listeners that are less familiar with this space, why do these big tech companies need Broadcom chips?

David Meier: It's a great question that can be answered with a question. Do you want your AI to work? If so, you need to be able to spread the computing around the data center and stitch it back together to deliver the answers you're looking for. That's what Broadcom's Chips does. You know, that's pretty important. That's got to be done. If we want this to work, that Broadcom's chips make it happen.

Jason Moser: Then as we wrap up on the Broadcom topic, anything else in the report really stand out to you?

David Meier: No, that 46% growth in the AI semiconductor part of their business, that's phenomenal. I mean, it just really is. That steals the show.

Jason Moser: Let's wrap up with DocuSign. JMO, DocuSign's revenue. This may surprise you. It's actually up from a year ago, and many investors have been out on this COVID fallen angel. I've clicked on Docusigns. What's happening with the business?

David Meier: This is a bit of a good news, bad news quarter, and, we'll get into the good news here in a minute. But why is the stock down? It really is about the Billings and the subsequent guidance for the coming quarter. Now, it's worth noting that they actually raised guidance for the full year, but I think the outlook for the coming quarter maybe has the market wondering how that's exactly going to play out. Management misfecast the Billings number, and that came in a little bit later. It's worth noting. We've seen this before with this company. It is partly a billing story. Billings that's ultimately a timing issue, so it can be difficult to predict. I wonder if they shouldn't just eliminate from even guiding on Billings, to be honest with you. But I mean, talking about the good news, like you said, top line revenue up, we saw what, 8%? We saw $1 net retention rate of 101%. The positive trend there continues, total customers up 10%, surpassing 1.7 million in large customers. We talk about this metric a lot with Docusign large customers spending over $300,000 annually with the company grew 6% from the year ago quarter. I mean, I understand the billings concerns, but there was also a lot to like in the report.

Jason Moser: Then quickly, this company has been telling investors a turnaround story for a while now. You can lose a lot of money waiting on turnaround stories. We've got 20 seconds left. Yes, no, maybe are you buying the turnaround story at DocuSign.

David Meier: Cautiously optimistic. I think all of the metrics that matter point toward this company still growing, and that's ultimately encouraging.

Jason Moser: David Meyer and Jason Moser, gentlemen, we will see you a little bit later in the show, but up next, we're going to make sense of the economy. This strange economy with Bloomberg Stacey Vanek Smith stay right here. You're listening to Motley Fool Money.

Ricky Mulvey: You're listening to Motley Fool Money? I'm Ricky Mulvey. The economy is in an interesting spot. The labor market looks hot on the surface, but it's a different story for college grads. As tariffs came online, inflation actually cooled. Helping me make sense of this is Stacey Vanek Smith. You may have heard her on Marketplace or the indicator from Planet Money. She's the co host of a new show called Everybody's Business. VanikSmith joined me earlier this week to make sense of the job market and tariffs. Stacey Vanek Smith co hosts the podcast Everybody's Business from Bloomberg Business Week. Welcome to Motley Fool Money.

Stacey Vanek Smith: Thanks, Ricky. It's great to be here. It's great to see you.

Ricky Mulvey: What an interesting time to check in on the job market. What we're seeing is this very healthy picture at the surface. The U-6 rate, which includes marginally attached workers.

Stacey Vanek Smith: You're going deep. The U-6 Rates. Let's go all in, yes.

Ricky Mulvey: Because that's people who want to work a little bit more. It's the biggest, broadest understanding of the labor market. As we look at the April numbers, and we'll have new numbers by the time you're hearing this, but not when we're recording this. That was down April to April. You heard at the last press conference from Jerome Powell, the unemployment rate remains low, and the labor market is at or near maximum employment. Stacey, this sounds like a labor market that is firing all cylinders, but there seems to be a lot of issues and problems under the surface.

Stacey Vanek Smith: I completely agree. I think this is just one of the most interesting job markets I've ever seen. I don't think I would have ever even imagined a disconnect like this would be possible because everything from my training, and I've been looking at business and economic issues for a long time, you know, it usually the job market is something that you feel. There's a reason I think that people know about the unemployment number. It's probably the most easy to talk about of all economic indicators, I think. I feel like it's the one people pay attention to the most because it's the one you feel and affects our day to day lives. I tend to think of it as something that connects very easily with my lived reality. it just does not feel at all like the job markets in a good place. It feels like it's in a bad place, and all the signs would point to a bad job market. But you're so right. If you look at the numbers, this job markets super strong. Unemployment's near historic lows. We just got the Jolts report, maybe the best name of an economic report that I know, but it's like I think it's job openings, labor turnover, something. But that report came out, and it looks great. Like, job openings are up. Hiring went up more than expected. I don't know, Ricky. I don't know. I have some thoughts, but it's is such a disconnect.

Ricky Mulvey: The good news is you're on a podcast, so you're welcome to share those thoughts. The Jolts report is an interesting one. That's one that I've called before the take your job and stuff it index because it's people voluntarily quitting their job usually with the belief that you can go out and find another job if you're willing to do that. You've also done some reporting with college grads right now. You looked into how the job market is looking for entry level workers, which is at the most risk of getting cut out by AI, especially for white collar jobs. What have you heard from them?

Stacey Vanek Smith: I did I'm based in New York, and so Colombia had their graduation last week. I went up and talked to some of the graduates about how they were feeling. Everyone I talked to felt pretty bad about the job market, except for one woman who was in engineering, who said she felt like everyone she knew had a job. Everybody else I talked to, when I talked to, like, a dozen people, everybody felt terrible about it. The computer science graduates felt terrible about it. I talked to one young man and he had a job, but he said about 40% of his fellow graduates in computer science did not have jobs. The electrical engineering graduates I spoke to said the market was terrible. Everybody just said, Universities are cutting funding, research is going down. Our job for computer science getting replaced by AI, like you said, they were feeling terrible about the job market.

Ricky Mulvey: Can you make any sense of that disconnect then? You have this very healthy surface number. You have college grads feeling not great. In the last quarter, GDP went down. Economic growth slowed a little bit, and you would expect to see jobs really reacting to that and yet, it is a full employment picture in the economy, according to our Fed Chief.

Stacey Vanek Smith: Well, I think there are few things going on. I mean, the short answer is, I don't know. I just don't know. I'm so puzzled. A couple of things to keep in mind is that sometimes jobs are a little bit of a lagging indicator because companies will often wait a little bit to lay people off if times get tough. Especially because we had that really hot job market during the pandemic and so it was a lot. It was hard for businesses to find workers in a lot of cases so they might be more hesitant than they would have been before to let people go, just knowing that it can be hard to find good people. There's a lot of uncertainty right now. I think maybe companies are waiting and seeing a little bit, so maybe they are just holding their cards close to their vest and waiting to make moves. But, I mean, another part of it is maybe the sectors that are hiring versus the sectors that are experiencing layoffs. I looked into the Joel report a little bit, and sectors like healthcare and social assistance. Those are hiring. A lot of the jobs are that and business services. The ones laying people off are like manufacturing and leisure and hospitality. Specially leisure and hospitality, I think is pretty visible. It could just be the sectors that are hiring might be less visible than the other ones. Also, as humans, we tend to be oriented more toward the bad news a little bit. I do think there tends to be a little bit of a negativity bias sometimes. We went through such a trauma with COVID. So maybe that's part of it. I have trouble believing that, but I don't know. I'm looking at the numbers. I can't I don't know. It doesn't make any sense to me. What about you?

Ricky Mulvey: I mean, some of its vibe from looking at LinkedIn, I see a lot of, like, job searching posts on LinkedIn. But then I realize, there's a tremendous amount of bias in that sample. One of which is because LinkedIn has this feature of the open to work sticker.

Stacey Vanek Smith: Yes. That's a good point.

Ricky Mulvey: It used to be not as visible if someone was looking for a job or just posting on LinkedIn. Then there's also a selection bias there where if one is posting regularly on LinkedIn, they are more likely to be looking for a job, and then I think there was a lot of gains. I haven't looked at the JOLTS report, but I would guess, with the slowdown in white collar work, the only way that that makes sense is if there is some makeup in what you said as healthcare work and then service and hospitality, even if it's not travel and leisure. That part would be my guess.

Stacey Vanek Smith: We're also journalists, and media is a hot mess right now. We might have a skewed view because the people we know and our colleagues, it's a difficult moment for media.

Ricky Mulvey: I'll also be curious to see what the long-term effects of a lot of these moves are. One of my buddies, who is a software engineer, a lot of the work that he's done at an entry level is talent development for a lot of big organizations. When that's passed to AI, his point is you're just going to have a slow leakage because everyone who knows things is going to move to different organizations or retire. Then you're going to be stuck with this longer term problem where you've developed no internal talent to take on the roles that middle managers and senior leaders need to do at your company, and you've eviscerated your firm system to use a baseball metaphor. I don't know if that'll entirely be true. Businesses are pretty nimble, but I do wonder if a lot of these companies are creating long-term problems for themselves by getting rid of the entry level positions.

Stacey Vanek Smith: I think that's probably true. That could account for why it's such a hard moment for recent grads in computer science to get jobs because the one young man, I keep wanting to say the kid that I talked to, but he was not a kid. He was a graduate in computer science with a job that he had lined up, but he said a lot of the entry level coding jobs were just being done by AI. He said he was using AI to do a lot of his coding, and I was like, do you think you would have had an assistant for that? He's like, maybe. He certainly would have taken a lot more of my time and he, I think, was at a little bit of a higher level, so he was OK, but I think you're right. A lot of the jobs that would have gone to people starting out that helped to build a pipeline, that help to funnel people into a career, I think a lot of those, especially in certain fields are getting snapped up by AI, for sure.

Ricky Mulvey: The other biggest economic story is tariffs. This is a tough topic to pre-record, but we shall try. We've had to make some edits in the past to let the listeners know because you record something one day, and then it turns out by Friday, when you're listening, that things get a little trickier. But from your economic lens, what are your biggest questions about this tariff story right now?

Stacey Vanek Smith: Tariffs, I'm so interested in this, and simultaneously also, so a little bit scared of it. You're so right. I do a lot of work for Marketplace, the public radio show, and I was talking to my editor there, and she said they will not assign any feature stories on tariffs anymore because things change so fast. She's like, we keep having to kill stories. I think Trump has changed tariff policies more than 50 times since he's taken office, 50 times. Usually trade deals, these are slow creaking wheels in the economy. They spend years hammering them out, and then they're in place forever. These are sleepy topics. There's this trade economist, Chad Bown, who's wonderful, and he has this podcast called Trade Talks. I remember, during Trump won, calling him and he was just like, this used to be the sleepiest job, and everyone would be like, what is there to even talk about? Do you ever get tired of talking about NAFTA? Now his phone is ringing off the hook because there are so many changes. I think the change is one of the big stories, honestly, all the back and forth, all the uncertainty. I think that there's a lot of speculation as to why Trump is doing that. Part of it's just that he likes making deals, and he changes his mind, and it's the threat that he can use.

To me, what it shows us, the American consumer has been the powerhouse of the global economy for decades now. American consumer spending is two-thirds of the US economy, but it's also almost 20% of the global economy, and so that is a lot of muscle to flex. I think Trump likes having that muscle to flex, but also the entire world's economy has accommodated itself around us buying tons of stuff. If that actually changes or even changes a little, I think the ripples from that are going to be immense. If these tariffs do go through at the scale that I think Liberation Day introduced, then I think we're in for a real problem. I always think about Argentina because I've done some reporting on Argentina. They put a whole bunch of protectionist tariffs in place in 2010. It completely destroyed their economy, and that is what keeps me up at night, I guess.

Ricky Mulvey: This is subject to change, but consumers are probably going to spend if prices don't rise dramatically. Right now, the economy is pretty much in the soft landing that the Fed wanted a while ago throughout this tariff spat. You had maximum employment mentioned by Fed Chair Powell, and you're also pretty close to that 2% inflation rate.

Stacey Vanek Smith: I know.

Ricky Mulvey: 2.1%, we round it. I would have thought that through Liberation Day, through these tariff policies, you would see prices rise immediately. I know you've done reporting on small businesses that are trying to figure out how to adjust prices, but what do you make of inflation staying pretty cool even throughout these economic tariff spat, economic dispute, trade war, whatever you want to call it?

Stacey Vanek Smith: This was a big shock to me too. This was another layer of vibe session because when the inflation report was coming out, the consumer price index, the CPI, this last one, I was like, here we go, because the tariffs have now been in place for a few months. Even though there's been a lot of back and forth, businesses have been padding their prices, businesses have had to try to find a way to cope with all the change too. I talked to one florist who was putting a flat fee on all of his bouquets because the tariffs on each of his flowers, which all came from different countries, was changing all the time. I still can't wrap my head around the fact inflation came down, and everyone's like, well, it's just a month of reprieve because businesses were able to stockpile stuff, like Apple. Tim Cook airlifted 600 tons of iPhones out of China, airlifted it. There is potentially some lag there. I just don't know anymore. I feel curiouser. It's like the Through the Looking-Glass economy. It is like the Lewis Carroll economy. Nothing seems to match up with what I think. Every time a report comes out, I'm like, here we go. Now we're going to see the stuff that I know we will see, we don't see it, and it could be that there is a lag in the case of the CPI and inflation numbers, I don't know.

Ricky Mulvey: I need to get my own phrase, like Kyla Scanlon got with vibecession. I need the opposite because you got economic growth slowing down, and yet the job market still appears to be strong on the surface. Also, the market is pretty close to all-time highs.

Stacey Vanek Smith: I know.

Ricky Mulvey: As we record this week, the S&P is pretty much made up from all of the losses that it initially withstood from Liberation Day. Its traders have completely brushed it off, but I think we are in a more volatile market. Stacey, as we wrap up, any other economic story lines you're watching that you're curious about right now?

Stacey Vanek Smith: Well, the thing that I'm watching, and maybe I'm watching it because it's the thing that lines up with the reality I've been observing, but it is the bond market. The bond market does seem to be flashing red, especially with the big beautiful bill, the tax cut extension going through Congress, which could potentially add $4 trillion to the deficit. The bond market does seem to be flashing red; like you said, nothing else is. Yes, we've got to come up with our anti-vibecession word, Ricky, but I will be watching the bond market, along with the markets and the job's numbers and inflation.

Ricky Mulvey: Stacey Vanek Smith, she's got a show, Everybody's Business. You can find it on Podcasts. Appreciate your time and your insight. Thanks for joining us on Motley Fool Money.

Stacey Vanek Smith: Thanks, Ricky. Great to be here.

Ricky Mulvey: As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. Advertisements are sponsored content provided for informational purposes only. See our full advertising disclosure. Please check out our show notes. Up next, Radar Stocks, stay right here. You're listening to Motley Fool Money.

I'm Ricky Mulvey, joined again by Jason Moser and David Meier. Before we get to Radar Stocks, I just want to point out, this is Rick Engdahl's final radio show. Rick is in the studio with us, the online studio, a longtime Fool, multimedia extraordinaire behind Rule Breaker Investing, Motley Fool Money, and Motley Fool Answers. He is a folk artist who somehow ended up at the Fool and an artist who's fixed problems that you, the listener, will never know existed. Rick, you are a total joy to work with. I will miss having you in recordings, and I look forward to seeing you in Colorado, man. I'm going to miss you. You'll hear him.

Rick Engdahl: Thank you very much, and I will miss all too.

Ricky Mulvey: Enough with the sentimentality. Let's get to stocks on our radar. That's promised every show, we got to do it. Our man behind the glass for the final time, Rick Engdahl is going to hit you with a question. Jason, you're up first. What are you looking at this week?

Jason Moser: Sure, a little company called Amazon, you may have heard of it, their ticker is AMZN, and coming off a pretty good core. But in news that is both fascinating and a little scary at the same time. Amazon's reportedly close to beginning testing human-like autonomous delivery methods, or in simpler terms, robots that deliver packages to your door. This is certainly quite futuristic and likely a ways away from becoming reality, but they're starting to test this stuff out. Given that it's working on humanoid robots for its warehouses, it's not that big of a leap to see how the technology could proliferate in time. Of course, agentic AI is behind it all in allowing these robots to actually understand and act on natural human language. It seems the future is now.

Ricky Mulvey: Rick, you got a quick question about Amazon or humanoid robots.

Rick Engdahl: Well, as you know, I tend to ask a little bit offbeat and witty questions. Since I have to hand this off, I'm going to have ChatGPT ask these questions for me, so I ask for some witty questions. Here you go. Is Amazon still a buy now or just a warehouse full of investor hopes?

Jason Moser: I think given the number of ways this company makes its money, I got to consider this thing a buy, still even today.

Ricky Mulvey: Real quick, David. Was that witty enough for you? Because it's your last show, I'll give you a 7 out of 10. David, quickly, what's on your radar this week?

David Meier: Mine is workflow management software company, Asana. Ticker is ASAN. This was a high flyer pre-pandemic that has come back down to Earth, and it's a more mature company today. It's still growing, but now it's generating cash, and it has a very bright future with its AI-related software that it's selling. Multiples are, I think, attractive today, so this is one that I am going to be looking at after letting go of the company in 2022.

Ricky Mulvey: Rick.

Rick Engdahl: This one's even better. Let's see. Is Asana the future of work or just working on its future?

Ricky Mulvey: Wow.

David Meier: It's a little of both because customers are using the software more and more, and that's a good thing for both the user and Asana.

Rick Engdahl: I appreciate you guys actually answering my questions there because they were really bad. I'm sure that AI will improve over time.

Ricky Mulvey: What are you putting on your watch list?

Rick Engdahl: I should, hold on a second, type in. Apparently, I'm going with Amazon.

Ricky Mulvey: We'll leave it there. Rick Engdahl, Jason Moser, David Meyer, thank you for being here. Thank you for listening to this week's Motley Fool Money.

JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Meier has no position in any of the stocks mentioned. Jason Moser has positions in Amazon and Docusign. Rick Engdahl has positions in Amazon and Tesla. Ricky Mulvey has positions in Lululemon Athletica Inc. The Motley Fool has positions in and recommends Amazon, CrowdStrike, Docusign, JPMorgan Chase, Lululemon Athletica Inc., and Tesla. The Motley Fool recommends Asana and Broadcom. The Motley Fool has a disclosure policy.

Ask Sherwin-Williams (NYSE: SHW) why its stock price is going down today, and your reply will probably be to ask Citigroup instead.

This morning, the investment bank downgraded shares of the paint maker from buy to neutral, and Sherwin-Williams stock is down 3.3% through 12:20 p.m. ET in response.

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What Citi thinks about Sherwin-Williams stock

"Housing dynamics" look "suppressed," warns Citi analyst Pat Cunningham in a note covered on StreetInsider.com today. Interest rates are high, and the likelihood of Federal Reserve cuts that would lower those rates looks slim. (Earlier today, J.P. Morgan's chief economist predicted the next Fed meeting will vote "unanimously" to leave rates unchanged.)

In the current economic environment, therefore, Citi says it has little "confidence in a material 2H25 US housing market recovery," nor a "favorable risk/reward" for buying Sherwin-Williams stock at its present price.

Is Sherwin-Williams stock a buy?

With its fortunes tied largely to the health of the residential housing market, Sherwin-Williams stock looks pricey at 34 times earnings, a projected growth rate of only 10%, and a meager dividend yield of just 0.9%. A better bet in the housing sector, thinks Citi, might be construction products company RPM International (NYSE: RPM), whose business is less tied to residential.

Despite its slower (8%) growth rate, RPM pays a dividend twice as big as Sherwin-Williams' (1.8%). And with its price-to-earnings ratio only 23, RPM stock costs half as much.

I'm personally not thrilled with these numbers either (paying 23x earnings for 10% growth doesn't seem much of a bargain). But Citi is right: As expensive as RPM stock looks, at least it's cheaper than Sherwin-Williams.

Should you invest $1,000 in Sherwin-Williams right now?

Before you buy stock in Sherwin-Williams, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sherwin-Williams wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $888,780!*

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See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Citigroup is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends RPM International and Sherwin-Williams. The Motley Fool has a disclosure policy.

With the stock market settling in after a volatile period, now is a good time to start looking at some leading growth stocks that have strong potential over the next decade.

Here are five growth stocks across industries that investors can look to hold for the long term.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

1. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (NYSE: TSM) is one of the most critical players in the artificial intelligence (AI) boom. As the world's leading contract chip manufacturer, TSMC manufactures the advanced semiconductors powering a range of products from AI infrastructure to smartphones and automotive tech.

Producing these chips isn't easy, as it requires leading-edge technology, precision manufacturing, and scale. Few companies in the world have the capabilities or the track record that TSMC does, and with competitors struggling, it has also garnered strong pricing power.

As such, the company has become the go-to partner for top chip designers, thanks to its leadership in advanced nodes and packaging. Advanced nodes refer to manufacturing processes that allow more transistors to be packed onto a chip, which in turn boosts performance and power efficiency.

Meanwhile, demand for high-performance computing, including AI chips, has exploded. With AI workloads growing, TSMC is expanding capacity alongside key customers to meet future demand.

Despite its pivotal role in the AI supply chain, TSMC's stock still looks reasonably valued. For long-term investors looking to benefit from the continued growth in AI infrastructure and semiconductors in general, TSMC is a great stock to hold.

2. Pinterest

Pinterest (NYSE: PINS) has undergone a quiet but powerful transformation under CEO Bill Ready. Over the past three years, the company has invested heavily in technology to turn its massive user base, which now sits at more than 570 million monthly active users worldwide, into a growth engine. Pinterest is no longer just an online vision board; it's become a shoppable platform with growing ad conversion capabilities.

One of the big drivers behind Pinterest's transformation has been its embrace of AI. The company built a multimodal model trained on both images and text to better understand what users are looking for. This powers personalized recommendations, while a visual search feature makes it easier for users to find and shop for products they see in pinned images. On the backend, meanwhile, its Performance+ platform is giving advertisers the tools to run better campaigns.

The results speak for themselves. Last quarter, Pinterest's revenue jumped 16%. Average revenue per user (ARPU) climbed across all regions, especially outside the U.S., where Pinterest is starting to better monetize users in emerging markets through the help of a partnership with Google.

Pinterest's stock still looks attractively valued, and the company is just scratching the surface of monetizing its user base. With AI-powered tools and a more shoppable platform, Pinterest has solid long-term investment potential.

3. Dutch Bros

Dutch Bros (NYSE: BROS) is shaping up to be one of the most compelling expansion stories in the restaurant space. With just over 1,000 locations across 18 states, the company believes it can more than double its footprint to 2,029 shops by 2029, and it sees the opportunity to eventually support 7,000 coffee shops nationwide.

Meanwhile, its small, drive-thru-focused shops are inexpensive to build, have attractive unit economics, and offer fast payback periods.

What makes the story even more attractive, though, is that Dutch Bros is only now starting to unlock other key growth levers. Mobile ordering, for example, is still early but gaining traction, accounting for only 11% of transactions last quarter. Mobile ordering also feeds into its loyalty program, allowing it to personalize its marketing and promotions.

The company is also leaning into food, testing hot items to drive breakfast sales at a few select locations. Food currently makes up less than 2% of sales, compared to nearly 20% at Starbucks, so there's real upside here. With more menu expansion and store openings on the way, Dutch Bros looks like a long-term winner.

4. Philip Morris International

Philip Morris International (NYSE: PM) is a growth stock in a defensive industry. While many tobacco companies are struggling with declining cigarette volumes in the U.S., Philip Morris doesn't have to worry about that because it doesn't sell cigarettes domestically. Instead, its growth is being driven by its smokeless portfolio, led by Zyn and Iqos, both of which have better unit economics than traditional cigarettes.

Zyn, its fast-growing nicotine pouch, has been its biggest growth driver, as evidenced by U.S. shipment volumes jumping 53% in Q1.

Meanwhile, Iqos, its premium heated tobacco product, continues to gain traction in Europe and Japan, with early success in new markets like Mexico City, Jakarta, and Seoul. In addition, after buying back its U.S. rights from Altria, the U.S. has the potential to be its next big growth driver. At the same time, its traditional cigarette business remains stable overseas, helped by strong pricing power and steady demand.

With strong pricing power, local manufacturing that limits tariff exposure, and growing demand for Zyn and Iqos, Philip Morris looks well positioned to keep delivering strong growth in the future.

5. Eli Lilly

Eli Lilly (NYSE: LLY) has emerged as a leader in the booming GLP-1 drug space, with surging demand continuing to drive strong revenue growth. Last quarter, its two key GLP-1 drugs -- Mounjaro and Zepbound -- generated a combined $6.1 billion in revenue, up sharply year over year. While Zepbound is officially approved by the Food and Drug Administration (FDA) for weight loss in obese adults or overweight adults with at least one weight-related condition, and Mounjaro is approved to help adults with type 2 diabetes, the reality is that the growth of these drugs is being driven by their being prescribed off-label for weight loss.

However, the drug that could be the biggest game changer for Lilly is still on its way. Orforglipron, its first oral GLP-1 drug candidate, recently demonstrated in a phase 3 trial that patients who took the drug lost considerable weight. As an oral medication, it is a much more convenient alternative to injectable GLP-1 drugs, making it especially appealing to patients who are wary of needles.

Orforglipron is also easier to manufacture and distribute than injectable drugs, as it doesn't require cold storage or injection pens. This should help Lilly avoid the supply constraints it saw with its injectable GLP-1 portfolio. With orforglipron looking like it has the potential to be the most potent oral GLP-1 weight loss drug on the market, Lilly is well positioned for continued future growth.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Geoffrey Seiler has positions in Philip Morris International and Pinterest. The Motley Fool has positions in and recommends Pinterest and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Dutch Bros and Philip Morris International. The Motley Fool has a disclosure policy.

Sometimes, it feels like bank stocks carry a stigma.

Perhaps it's the persona of the extremely wealthy, the "suits" as some on social media might call them, that some associate with big banks. Maybe it's a result of the political backlash from the financial aid some banks received during the 2007-2009 financial crisis. Or, it could be that banks are complicated businesses that even professional analysts can struggle to sift through.

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The Motley Fool dove into the financial sector and reported on the world's largest financial companies by market cap. JPMorgan Chase (NYSE: JPM) checked in at No. 2, after Berkshire Hathaway. America's largest bank has delivered strong returns for shareholders, with annualized investment returns exceeding 25% during the past five years.

Is the stock still a buy, or has this big bank stock peaked? Here is what you need to know.

A lucrative business with a virtually impenetrable moat

Big banks like JPMorgan Chase touch almost every aspect of the economy. They are involved in a wide range of financial products and services, including (but not limited to) consumer and business banking, mortgages, investment management, and student lending. A bank's finances are a complicated web, but a bank's primary function is lending money at higher rates than it pays to depositors.

There are two competitive advantages in that game: size and stickiness. Let me explain.

Larger banks have more resources to invest in areas such as technology to analyze and act on data, marketing to attract customers, and cheaper access to capital that they can use to undercut smaller competitors. It's a significant reason big banks continue to grow larger, while the total number of banks and credit unions in the U.S. has steadily declined.

JPMorgan Chase is America's largest bank with more than $4.3 trillion in assets. It offers practically every financial product or service you could imagine. A customer is more likely to stick with JPMorgan Chase as they use them for more of their financial needs.

It's hard to see anything other than government regulation threatening the wide moat JPMorgan and other large U.S. banks enjoy.

Why JPMorgan Chase will likely continue to grow

Since JPMorgan Chase is essentially everywhere in the economy, it is likely to grow in tandem with it. That trend has played out for years:

JPM Total Assets (Quarterly) data by YCharts

A bank also benefits from inflation, where asset prices, home values, and loan sizes all grow over time. The catch is that recessions can hurt banks when people and businesses spend and borrow less, and loan defaults rise.

It's a part of investing in bank stocks, though it's worth noting that the 2007-2009 financial crisis was one of the worst events in the financial sector since the Great Depression. Some banks didn't survive, but JPMorgan Chase did, and has thrived in recent years. The stock has outperformed the S&P 500 index by a wide margin during the past decade.

Is the stock a buy?

Here's the problem for investors now. JPMorgan Chase stock currently trades at about 2.2 times its book value, near its highest valuation during the past decade. That's not ideal when the economy is showing multiple signs of potential weakness including:

• U.S. household credit card debt is at an all-time high.
• Auto loan delinquencies are at decade-highs, excluding a spike during the pandemic.
• Student loan repayments are fully resuming after a multiyear pandemic freeze.
• Interest rates are rising, squeezing demand for mortgages and other loans.

Even JPMorgan Chase's chief executive officer, Jamie Dimon, has publicly expressed concern for the economy's direction. Although JPMorgan is a world-class business and bank, it's tough to justify paying such a high valuation for a company that could soon be subjected to a weaker economy than it has enjoyed for most of the past five years.

Nobody can predict these things with certainty, but investors may be wise to tread lightly here.

Should you invest $1,000 in JPMorgan Chase right now?

Before you buy stock in JPMorgan Chase, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Chase wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Researchers have found malicious software that received more than 6,000 downloads from the NPM repository over a two-year span, in yet another discovery showing the hidden threats users of such open source archives face.

Eight packages using names that closely mimicked those of widely used legitimate packages contained destructive payloads designed to corrupt or delete important data and crash systems, Kush Pandya, a researcher at security firm Socket, reported Thursday. The packages have been available for download for more than two years and accrued roughly 6,200 downloads over that time.

A diversity of attack vectors

“What makes this campaign particularly concerning is the diversity of attack vectors—from subtle data corruption to aggressive system shutdowns and file deletion,” Pandya wrote. “The packages were designed to target different parts of the JavaScript ecosystem with varied tactics.”

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Banking disruptor SoFi Technologies (NASDAQ: SOFI) has grown at an impressive pace in roughly four years since it became a publicly traded company. The company's membership base has more than tripled since the end of 2021, SoFi's banking platform has grown from zero at the start of 2022 to more than $27 billion in consumer deposits today, and its adjusted EBITDA in 2024 was about 23 times what it was just three years prior.

Even after this fantastic growth, SoFi remains a relatively small financial institution. It is currently the 63rd largest U.S. bank by assets, according to Federal Reserve data. Not only does it have tons of room to grow its customer base and relationships, but there are also some extremely promising growth drivers that investors should know about.

Is SoFi ready to jump to the next level?

In the first quarter of 2025, SoFi grew its revenue by 33% year-over-year, posted its highest earnings per share yet, and added about 800,000 new members – the most it has ever added in a single quarter.

However, 10.9 million members still gives the company tons of room to grow, and management is doubling down on its brand awareness efforts. As one example to show how small SoFi still is, consider that online financial institution Discover (NYSE: DFS) has about 300 million open accounts.

There are some particularly interesting potential catalysts to keep an eye on:

• The average SoFi member has just 1.4 products with the company. A product is something like a bank account, loan, or credit card. The focus has understandably been on growing the membership base, but this has created massive potential to cross-sell products and services to existing members.
• SoFi is rapidly scaling its third-party loan origination platform, which requires none of its own capital but generates a low-risk, high-margin stream of fee income.
• SoFi's core lending business is personal loans, but its student loan and home loan originations increased by 58% and 54%, respectively, in the most recent quarter. If interest rates start to fall, the home loan segment could be a particularly interesting opportunity, especially when it comes to refinancing, as Americans are sitting on more home equity than ever before.

These are just a few examples. But the point is that there are some big catalysts that could help SoFi continue to grow its business and become more profitable in the coming years.

Can SoFi stock produce life-changing wealth?

With a valuation of 2.9 times tangible book value and about 50 times forward earnings as of this writing, SoFi is not exactly a cheap bank stock. However, considering its momentum and high net interest margin, SoFi could be a massive home run if it can deliver on its growth strategy.

SoFi's management has previously stated that its goal is to grow to the point where it is a top 10 financial institution.

For context, the 10th largest commercial bank in the United States today is TD Bank (NYSE: TD), which has about $373 billion in domestic assets. SoFi has $37.7 billion in total assets, so it would need to grow tenfold in size to break into the top 10 list. (Note: TD is roughly one-tenth the size of the largest U.S. bank, JPMorgan Chase.)

If SoFi were to achieve such scale, the business would probably be a highly valued one. For one thing, SoFi is rapidly building out the asset-light parts of its business, such as the third-party loan platform, and these could conceivably scale to a large size as well. Plus, the nature of SoFi's loan portfolio as well as its low cost structure gives it the potential for a higher return on assets than the typical bank. In fact, every single one of the 10 largest U.S. banks is primarily branch- or office-based.

In other words, if SoFi were to increase tenfold in size, in terms of assets, it would probably command a higher valuation than the other large U.S. banks. Therefore, if management can achieve its goal and reach a top 10 position within the next decade or two, its stock could potentially produce life-changing wealth for investors.

Should you invest $1,000 in SoFi Technologies right now?

Before you buy stock in SoFi Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoFi Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $701,781!*

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*Stock Advisor returns as of April 28, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Discover Financial Services is an advertising partner of Motley Fool Money. Matt Frankel has positions in SoFi Technologies. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

The Dow Jones Industrial Average is down 12% from its all-time high at the time of writing, as sweeping changes to U.S. trade policy usher in concerns regarding the economy's strength.

Despite these uncertainties, reliable and high-quality dividend income from a diversified portfolio can be a great option for investors to ride out stock market turbulence. By this measure, JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) deserve a closer look as two leading Dow Jones components, supported by robust fundamentals and global diversification that remain well-positioned to navigate any market environment.

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Let's discuss which of these financial titans is the better dividend stock to buy now.

The case for JPMorgan: A fortress balance sheet

It's often said that it pays to be at the top. In this case, it's not a coincidence that shares of JPMorgan have outperformed the broader market, returning 30% over the past year. JPMorgan benefits from its dominant position as the largest U.S. bank, bolstered by a global financial services footprint.

Its size and scale, with $4.4 trillion in assets -- more than twice Goldman's $1.8 trillion total assets -- could be an advantage during economic turmoil, leveraging a broader deposit base and more diversified revenue streams to support profitability.

That was the message from JPMorgan CEO Jamie Dimon in the first quarter earnings report (for the period ended March 31), who cited "considerable turbulence" facing the U.S. economy amid looming impact of new trade tariffs, but reaffirmed that the bank's underlying business remains strong.

First quarter highlights included record trading revenues driven by market volatility, while resilient consumer spending at the start of the year boosted credit card services and auto lending. For 2025, JPMorgan expects $94.5 billion in net interest income, a 1.5% increase from last year.

The bank's recent 12% dividend increase to $1.40 per share quarterly is excellent news, resulting in a forward yield of 2.4%. With its rock-solid balance sheet, JPMorgan's steady growth and ability to consolidate market share make it a great dividend stock and a compelling portfolio addition.

The case for Goldman Sachs: More upside potential

While JPMorgan is built like a tank, Goldman Sachs stands out with its fighter jet-level sophistication and market agility. Goldman compensates for its limited exposure to consumer banking with a targeted approach in high-margin investment banking activities.

In the first quarter, Goldman set several operating and financial records, including top rankings in M&A, equity offerings, and record financing net revenue. The bank also marked its 29th consecutive quarter of capturing fee-based net inflows in asset and wealth management. Although Goldman's profile is more economically sensitive, this could be an advantage for shareholders if conditions improve, potentially driving stronger earnings growth than JPMorgan.

For bullish investors who believe recession fears are overblown, Goldman Sachs stock may offer more upside as a buy-the-dip opportunity.

Goldman has rewarded shareholders with significant dividend hikes in recent years, more than doubling its quarterly rate to $3.00 per share since 2021 and outpacing JPMorgan's dividend growth over the past five years. With a strong Q1 adjusted EPS jump of 22% from last year, there's a good chance Goldman will announce another dividend increase later this year, potentially in the double-digit range.

Furthermore, Goldman Sachs stock appears relatively undervalued with a forward price to earnings (P/E) ratio of 12 based on 2025 consensus EPS estimates, compared to JPMorgan's multiple near 13. By this measure, there's a case to be made that shares of Goldman are undervalued relative to its banking peer.

JPM Dividend Yield data by YCharts.

Decision time: Goldman is my pick

JPMorgan Chase and Goldman Sachs offer similar dividend yields and face the same macroeconomic headwinds, making it tough to choose the better dividend stock. Still, I give the edge to Goldman, believing its stock offers a better balance of value and dividend growth potential. For investors willing to ride out near-term volatility, Goldman is a great long-term buy-and-hold option in a diversified portfolio.

Should you invest $1,000 in Goldman Sachs Group right now?

Before you buy stock in Goldman Sachs Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Goldman Sachs Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.

Stock markets got over their case of the Mondays really quick this week, and after regaining all their Monday losses on Tuesday, are roaring even higher as Wednesday gets off the ground.

Financial stocks are doing particularly well this morning. As of 10:20 a.m. ET, shares of Bank of America (NYSE: BAC) are gaining a respectable 2.8%, while JPMorgan Chase (NYSE: JPM) is doing even better with a 3.6% rise, and American Express (NYSE: AXP) is doing best of all -- up 5.4%.

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The American stock market's big news day

What's behind the optimism? President Donald Trump, of course.

After spooking markets earlier in the week with threats to oust Federal Reserve Chairman Jerome Powell, Trump ratcheted back the rhetoric this morning, even going so far as to assure investors he has "no intention" of firing Powell (or at least not until the end of his term of office next May). This promise, for as long as it lasts, may be of particular reassurance to financial investors as they're more closely tied to moves by the Fed than anyone else, and were presumably more worried than others about what political pressure on the Fed might do to interest rate policy.

Meanwhile, in tariffs news, the president held out the prospect of falling tariffs on China, which holds the potential to both reduce strain on the American economy and -- potentially -- short-circuit an incipient global trade war that seemed all but certain to happen as recently as Monday. Both prospects diminish the chance of the U.S. falling into recession this year, and that's music to investors' ears.

Referring to tariffs on Chinese imports that have reached levels capable of potentially ending trade between the two countries entirely, the president opined that once negotiations run their course, tariffs on Chinese goods will probably come down "substantially." Forget 145% tariffs. They soon "won't be anywhere near that high."

Is it time to buy bank stocks?

Worries over tariff policy, and the recession risk they raise, have been especially concerning to the banking and credit card industries, reports The Wall Street Journal. As recently as this morning, that paper reported on how credit card companies are bracing for an economic downturn in which consumers stop spending because imported goods have become simply too expensive to buy.

All three of the banks named above were cited in the story, with Amex in particular warning that "consumers are holding off on nonessential splurges" and JPMorgan said to be ratcheting up reserves against an expected recession. The good news is that BofA says consumers are, for now, "still solidly in the game," however. And if Trump ends up calling off his trade war in time to avert a recession, things could turn out as well as investors today seem to feel they will.

Potentially, this could all work out very well indeed for investors brave enough to roll the dice at today's better-than-Monday, but still depressed, valuations. American Express stock is now trading for an unchallenging 17.6 times trailing earnings, while Bank of America and JPMorgan stocks look downright cheap at 11.4 and 11.6 times earnings, respectively.

Of the three, I personally prefer BofA and JPMorgan over Amex, though. Not only are their valuations more attractive, but JPMorgan also pays a 2.4% dividend yield, and BofA 2.7% -- both twice the dividend yield on Amex stock. If you're in the mood to do some bank stock shopping today, I'd start with those two.

Should you invest $1,000 in JPMorgan Chase right now?

Before you buy stock in JPMorgan Chase, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Chase wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy.

Shares of Apple (NASDAQ: AAPL) are currently 26% below their peak from December last year (as of April 10), a drop that has been spurred by ongoing tariff announcements. As of this writing, there is a huge 145% tariff that's implemented on goods leaving China for the U.S. If this remains in place, it could harm Apple, because 80% of its production is still based in China, according to estimates from Evercore.

For consumers, the result could be much higher prices. If the increased costs are eaten by Apple, on the other hand, its profitability will definitely take a hit. There remains a lot of uncertainty about how things will play out.

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Despite the potential effects, which are commanding all the attention these days, Apple has proven to be successful in another area that highlights growing diversification in the business model. Here's what investors need to know.

Apple's push into financial services

In fiscal 2024 (ended Sept. 28, 2024), Apple generated $391 billion in revenue, of which 75% came from the sale of products. This includes its popular iPhone, Mac, and iPad lineups.

But the company's services division is an up-and-coming money-maker, growing revenue 13% in the latest fiscal year, much faster than the overall business. It represents the other 25% of Apple's total sales.

Within services, Apple is making a bigger push into the financial services realm, where it appears to have developed a strong foothold.

In 2014, the company launched Apple Pay, its digital wallet solution that lets users connect credit and debit cards to use for transactions in-store and online. More than 90% of retailers in the U.S. accept Apple Pay, which has more than 600 million global users and handles trillions of dollars in payment volume. This is undoubtedly becoming a widely used checkout option.

Apple Card was launched in 2019. This is a credit card that gives consumers up to 3% cash back with no fees whatsoever. Apple partnered with Goldman Sachs to handle the program. The credit card portfolio has 12 million customers (data from early 2024) and $20 billion in balances.

Valuable for partners

It was reported that Visa offered the tech titan a cool $100 million to end its relationship with Mastercard, the current card network for Apple Card. American Express is also in the mix. What's more, issuers like JPMorgan Chase, Capital One, Synchrony Financial, and others are reaching out to Goldman Sachs, offering to take over the $20 billion in balances and to handle the program.

It makes sense why these heavyweights in the financial services industry would be trying so hard to be Apple's partner. Apple generates enormous amounts of revenue, and its customers are generally known to be more affluent than average. Consequently, there is a lot of buying power here, which can lead to revenue opportunities for banks and payment networks.

Apple might be facing some headaches due to tariffs and how they can affect its device sales. But its payment and credit card offerings continue to shine brightly. Partners are jockeying for position.

Should you buy Apple stock on the dip?

This gets to the discussion of whether or not Apple shares are a smart buy right now, especially since they are 26% below their record high. The price-to-earnings ratio is better than it was in December -- it's now at a 30.2 multiple.

However, I'm not convinced the tech stock can produce a return over the next five years that can outperform the broader market. Not only is the valuation still elevated, Apple's growth prospects aren't that robust. Plus, there is the unfortunate overhang of the tariff situation.

This is a fantastic business. But investors should pass on buying shares.

Should you invest $1,000 in Apple right now?

Before you buy stock in Apple, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

American Express is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Synchrony Financial is an advertising partner of Motley Fool Money. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Goldman Sachs Group, JPMorgan Chase, Mastercard, and Visa. The Motley Fool has a disclosure policy.

For more than a century, the stock market has been the premier wealth creator for investors. But this doesn't mean stocks move higher in a straight line.

Over the last seven trading sessions, investors have witnessed historic levels of volatility in the iconic Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and growth-focused Nasdaq Composite (NASDAQINDEX: ^IXIC).

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For example, the 90-day pause on higher reciprocal tariffs for most countries, which was announced by President Donald Trump on April 9, led the Dow, S&P 500, and Nasdaq to their largest single-session point increases in their respective histories. Meanwhile, the Nasdaq endured three of its five biggest single-day point declines from April 3 to April 10, with the S&P 500 navigating three of its six-largest single-session point drops during this same span.

Volatility is the price of admission investors pay for access to this proven wealth creator. Thankfully, stock market corrections, bear markets, and crashes tend to be short-lived. Putting your money to work during periods of historic volatility is usually a smart move.

But well before the stock market's bout of historic volatility, some of Wall Street's brightest money managers were purchasing safe stocks that can thrive in virtually any environment. What follows are five of the safest stocks billionaire investors have bought for their respective funds.

Philip Morris International

Lone Pine Capital's billionaire chief Stephen Mandel purchased four new stocks for his fund's portfolio during the December-ended quarter, as well as added to five existing positions. Arguably, none of these additions stands out more than the 1,987,716 shares purchased of tobacco giant Philip Morris International (NYSE: PM).

Tobacco stocks may not be 100% impervious to stock market volatility and short-term fear, but they're pretty close to it. Cigarette smokers have demonstrated a willingness to absorb substantial price hikes over time, and the addictive nature of the nicotine found in tobacco keeps most users loyal to the product.

Philip Morris also has the advantage of operating globally. With a presence in more than 180 countries, it's able to move the organic growth needle in emerging markets where tobacco is still a luxury, as well as rake in generally predictable operating cash flow in developed countries.

Lastly, Philip Morris International is benefiting from its ongoing but increasingly successful transition to a smokeless future. The introduction of Zyn nicotine pouches and its Iqos heated tobacco system have reignited sales and profit growth for the company. While Philip Morris stock is unlikely to move significantly higher during the current market tumult, its downside is, presumably, limited.

Teva Pharmaceutical Industries

Billionaire Stanley Druckenmiller of Duquesne Family Office closed out 2024 overseeing a 78-stock, $3.72 billion fund. Though turnover tends to be high in Druckenmiller's fund, he's been aggressively adding to an existing position in brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE: TEVA). Druckenmiller green-lit the purchase of 7,569,450 shares of Teva in the fourth quarter.

What's great about healthcare stocks is they're highly defensive. This is to say that people don't stop becoming ill or requiring prescription drugs just because Wall Street had a rough couple of weeks. With demand for brand-name and generic drugs constant and/or climbing, Teva's cash flow can be forecast well in advance.

Teva's recent return to sales growth is a function of the company shifting its strategy more toward novel-drug development. Whereas generic drugs offer low margins and pricing power can be weak at times, novel therapies sport juicy margins and strong pricing power. Tardive dyskinesia drug Austedo, which is Teva's top-selling brand-name therapy, may surpass $2 billion in sales this year after generating $1.23 billion in revenue in 2023.

Teva's turnaround has also featured a remarkable improvement in its financial flexibility. Following its August 2016 buyout of generic drugmaker Actavis, Teva's net debt clocked in around $35 billion. It ended last year at closer to $14.5 billion. With Teva's forward price-to-earnings (P/E) ratio now below 5, the risk-versus-reward profile strongly favors optimists.

Sirius XM Holdings

Despite Berkshire Hathaway's Warren Buffett being a persistent net seller of stocks for the last nine quarters, he's done a little bit of shopping recently. In particular, he's been scooping up shares of satellite-radio operator Sirius XM Holdings (NASDAQ: SIRI). Between Jan. 30 and Feb. 3, Berkshire's billionaire chief oversaw the purchase of 2,308,119 shares of Sirius XM.

One reason Sirius XM can be viewed as something of a safe stock amid historic market volatility is its legal monopoly status. It's the only licensed satellite-radio operator. Although it still fights for listeners with terrestrial and online radio companies, being the only licensed satellite-radio provider affords it a good degree of subscription pricing power.

Sirius XM's revenue diversification also helps it stand out from its peers. While most radio operators generate the bulk of their revenue from advertising, which is prone to significant weakness during periods of uncertainty for the U.S. economy and Wall Street, Sirius XM brought in just 20% of its net sales from ads last year. A majority of its revenue (76% of 2024 net sales) comes from self-pay subscriptions. These subscribers are less likely to cancel their service than businesses are to pare back their marketing budgets during periods of turbulence.

Sirius XM's valuation provides a solid floor, too. Valued at just 6.5 times forward-year earnings, there's reason to believe the company's downside is minimal at this point. A dividend yield north of 5% doesn't hurt, either.

Elevance Health

Billionaire Leon Cooperman closed out 2024 holding 45 securities valued at more than $2.6 billion. While there were more than a dozen stocks newly purchased and/or added to during the fourth quarter, the stand-out buy was the addition of 107,400 shares of health insurance juggernaut Elevance Health (NYSE: ELV).

Circling back to the discussion of Teva, demand for healthcare services tends to be highly predictable, regardless of what's happening with the U.S. economy or stock market. The advantage for health insurers is that it typically affords them relatively strong premium pricing power. In other words, they're often able to increase premiums to ensure they can cover rising treatment costs.

In addition to strong premium pricing power, Elevance has relied on acquisitions to expand the reach of its potentially higher-margin healthcare services subsidiary Carelon. This includes the buyouts of home health provider CareBridge, as well as BioPlus, which is a specialty pharmacy catered to patients with complex and chronic conditions. This healthcare services focus can increase margins and keep users within Elevance Health's ecosystem.

Shares of Elevance Health are currently valued at 11 times forecast earnings for 2026, which represents a 19% discount to its average forward earnings multiple over the last half-decade. This should provide ample downside protection amid heightened stock market volatility.

American Tower

The fifth billionaire money manager who was purchasing shares of an exceptionally safe stock in advance of Wall Street's historic volatility is Viking Global Investors' Ole Andreas Halvorsen. Among the 86 stocks Halvorsen holds stakes in, the brand-new acquisition of 897,340 shares of specialty real estate investment trust (REIT) American Tower (NYSE: AMT) is what stands out.

American Tower is best-known for its ownership of roughly 149,000 cellular communication towers in the U.S. and 21 other countries. Large telecom companies lease access to these towers for the antennas that make their 4G and 5G wireless networks tick. Approximately 45% of American Tower's fourth-quarter revenue came from America's big-three telecom companies, with another 28% in sales tracing back to international telecom tenants. More than half of these existing leases extend to 2030 or beyond, which leads to highly consistent funds from operations.

However, American Tower is also dipping its toes into the water to take advantage of the growing artificial intelligence (AI) and tech boom. As of the end of 2024, it was operating 29 data centers, many of which were in metropolitan U.S. cities. Though data center leasing represents only 10% of total sales at the moment, it's the company's fastest-growing segment.

The final puzzle piece that makes American Tower a safe stock to own is its dividend. In exchange for preferred tax treatment, REITs dole out most of their profits in the form of a dividend. American Tower stock is currently yielding in excess of 3%.

Should you invest $1,000 in Philip Morris International right now?

Before you buy stock in Philip Morris International, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Philip Morris International wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Sean Williams has positions in Sirius XM and Teva Pharmaceutical Industries. The Motley Fool has positions in and recommends American Tower and Berkshire Hathaway. The Motley Fool recommends Philip Morris International and recommends the following options: long January 2026 $180 calls on American Tower and short January 2026 $185 calls on American Tower. The Motley Fool has a disclosure policy.

Shares of JPMorgan Chase (NYSE: JPM) rallied 4% on Friday, well above the market's return.

The country's largest bank released its earnings today, which beat analyst expectations. Of course, past results don't matter that much, as investors are focused on the forward outlook in light of the administration's tariffs and potential trade war.

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However, management increased its annual outlook for net interest income and also posted strong capital ratios. That might have provided some comfort for investors who bought the stock today after the recent market correction.

JPMorgan remains a safe haven in an uncertain world

In the first quarter, JPMorgan saw net managed revenue rise 8% year over year to $46.0 billion, while adjusted (non-GAAP) earnings per share, adjusted for one-time costs, was $4.91, about $0.27 higher than expected.

The company also posted a very strong 21% return on tangible equity while bolstering its balance sheet with a 15.4% Common Equity Tier 1 (CET1) ratio. Furthermore, management increased the company's 2025 outlook for net interest income to $94.5 billion, up by half a billion from last quarter.

The beats came despite JPMorgan increasing its provisions for loan losses to $3.3 billion, up from just $1.9 billion last year. That's perhaps unsurprising in light of the tariff-related volatility we have seen, which has increased the odds of a recession later this year to about 50% on average, according to the bank.

However, recent market volatility has helped boost trading revenues, which were up a strong 21%, higher than the expected low-double-digit growth. Meanwhile, the investment banking segment saw signs of life on higher debt issuance, with investment bank (IB) fees up 12%. And despite the market sell-off, JPMorgan's wealth management segment brought in another $90 billion in assets in the first quarter.

JPMorgan remains a safe blue chip bank stock with dry powder

Chairman and CEO Jamie Dimon made a big point of JPMorgan's rock-solid balance sheet, which could enable the company to weather economic turbulence and perhaps capitalize on opportunities this year. He noted:

We continue to believe it is prudent to maintain excess capital and ample liquidity in this environment -- our CET1 ratio remained very strong at 15.4%, and we have an extraordinary amount of liquidity, with $1.5 trillion of cash and marketable securities... As always, we hope for the best but prepare the Firm for a wide range of scenarios.

JPMorgan's stock still trades at around 12 times earnings, which is fairly cheap. That said, the threat of potential recession or stagflation remains due to the current tariffs and trade wars.

While bank stocks could be susceptible to "economic turbulence," JPMorgan seems like a very safe player that investors can buy or hold with confidence.

Should you invest $1,000 in JPMorgan Chase right now?

Before you buy stock in JPMorgan Chase, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Chase wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Financial services giant JPMorgan Chase (NYSE:JPM) reported 2025 results on Friday, April 11, that exceeded analysts' consensus top- and bottom-line expectations. Earnings per share (EPS) of $5.07 solidly beat the analyst estimate of $4.63. Revenue rose to $45.3 billion, topping estimates of $44 billion and rising 8.1% year over year.

Overall, the results reflected a strong quarter with particular emphasis on revenue generation and EPS growth, despite the mixed economic backdrop.

Metric	Q1 2025	Analysts' Estimate	Q1 2024	Change (YOY)
EPS	$5.07	$4.63	$4.44	14.2%
Revenue	$45.3 billion	$44 billion	$41.9 billion	8.1%
Net income	$14.6 billion	N/A	$13.4 billion	9.2%
Return on equity (ROE)	18%	N/A	17%	1.0 pps
ROTCE	21%	N/A	21%	0 pps

Source: JPMorgan Chase. Note: Analysts' consensus estimates for the quarter provided by FactSet. YOY = Year over year. ROTCE = Return on tangible common equity. pps = Percentage points.

Overview of JPMorgan Chase's Business

JPMorgan Chase is a financial powerhouse, known for its comprehensive banking services spanning consumer banking, investment banking, and asset management. The company leverages its scale and extensive resources, offering a competitive edge in the diversified financial space. Its wide reach enables it to cater to various customer segments, from individual consumers to large institutions globally. Recent strategic moves, such as merging business segments, reflect its adaptability and focus on enhancing operational efficiency and resource allocation.

Key areas of focus include maintaining market leadership, navigating the regulatory landscape, and innovating in an ever-competitive financial sector. These strategic initiatives are critical to its sustained success and competitive positioning. Its management emphasizes the importance of prudent capital management and technological advancement to drive growth and customer engagement.

Quarterly Highlights and Financial Performance

JPMorgan Chase's first quarter of 2025 was marked by notable achievements and strategic advancements. Its Commercial & Investment Bank segment posted a net income increase of 5% year over year to $6.9 billion, with a standout performance in Markets revenue, which saw a 19% jump. Equities trading was particularly robust, advancing 48% year over year, driven by its market leadership in trading activities.

Despite an 8% decline in net income within the Consumer & Community Banking segment, due to increased credit costs, the segment benefited from an 8% rise in active mobile customers, highlighting success in digital customer engagement. Asset & Wealth Management reported a 23% increase in net income, driven by a 12% boost in net revenue, showcasing continued investor confidence and portfolio performance.

The macroeconomic and regulatory challenges persisted, as noted by CEO Jamie Dimon, who referenced the impacts of geopolitical tensions and inflation pressures. The firm also maintained a strong capital position, with a CET1 Capital Ratio of 15.4%, endorsing its cautious yet strategic financial stewardship amidst evolving economic dynamics.

The quarter included no significant changes in dividend declarations. The company achieved a $973 million net reserve build, anticipating potential credit challenges, and maintaining a resilient stance in the fluctuating economic climate.

Looking Ahead

Looking forward, JPMorgan's management provided a cautious outlook, acknowledging the potential for economic uncertainties, including the increased risk of a recession. Management said it remains focused on strategic segment reorganization to improve efficiency and meet evolving market demands. Maintaining robust balance sheets and ample liquidity is paramount in navigating potential challenges.

Analyst guidance indicates efforts to sustain positive performance trends, though market conditions remain volatile. Investors should watch for updates on capital management practices and regulatory developments. The firm's commitment to innovation and human capital development will be critical as it navigates future quarters.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 787%* — a market-crushing outperformance compared to 152% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

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Two days after President Donald Trump issued a 90-day pause on higher tariff rates for most countries except China, JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon warned that the "economy is facing considerable turbulence," citing concerns of trade wars, persistent inflation, and fiscal deficits. In JPMorgan's first-quarter earnings call this morning, Dimon placed the odds of a recession at a 50-50 coin flip.

Yet despite his ongoing concerns about the economy and the administration's trade negotiations, Dimon said he's less concerned about a recession in the current climate and has other things on his mind during this economic cycle for one reason, in particular.

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JPMorgan is well prepared for economic turbulence

If you were to block out all the noise and focus on JPMorgan's first-quarter earnings, one might simply see business as usual. The bank beat analyst estimates on earnings and revenue and actually slightly lifted its guidance for net interest income, one of the primary sources of revenue for most banks. Meanwhile, credit came in solid, with stable net charge-offs and lower nonperforming assets in the first quarter than the prior quarter. The bank built its credit reserves by about $1 billion, half the amount it did in the previous quarter.

Still, Dimon cautioned against reading too much into the backward-looking results and forecast. "We should have not given you that forecast. We don't know what the number's going to be. I would say it's a short-term number and based on what's happening today, there's a wide range of potential outcomes," he said. The guidance alludes to some things that are mechanical, like how loan losses flow through a bank. They don't just happen overnight. First, they are marked delinquent, and it can take months until they are actually ruled as a loss.

Dimon also said he expects analysts to eventually reduce their earnings forecasts for the broader benchmark S&P 500 (SNPINDEX: ^GSPC) and pencil in zero growth, down from an earlier projection of about 10%, which they have since lowered to 5% growth.

Dimon is not worried about JPMorgan navigating a recession, saying the bank has plenty of capital and liquidity to deal with whatever is thrown its way. He also noted the bank added $15 billion to its credit reserves in two months during the COVID-19 pandemic, only to release an equivalent amount of reserves several months later, partially due to the forward-looking way banks must now account and prepare for loan losses.

JPMorgan Chase also ended the first quarter with a 15.4% common equity tier 1 (CET1) capital ratio, which compares a bank's core capital to its risk-weighted assets such as loans. This is the capital banks lean on to cover unexpected loan losses. JPMorgan's ratio of 15.4% is 300 basis points higher than when the pandemic started, which equates to billions of dollars of additional capital.

The big concern is the future of trade

Dimon's main concern seemed to be the current state of the economy and what's going on with tariffs and a looming trade war. As of midday Friday, U.S. tariffs on China amount to 145%, while China said it would retaliate with total tariffs of 125%.

Obviously, if you look at our numbers, we have the margins and capability to get through just about anything.... But guys, this is different, OK? This is different. [It's about] safety and freedom for democracy. That is the most important thing. I really almost don't care fundamentally about what the economy does in the next two quarters. That isn't that important... the China issue is a major issue. I don't know how that's going to turn out. You know, we obviously have to follow the law of the land, but, you know, it's a significant change that we've never seen in our lives.

Dimon also touched about the potential impacts of JPMorgan's status as a global player and how embedded it is in other countries. "I do think some clients or some countries will feel differently about American banks," he said. However, Dimon was also hopeful that the Trump administration will be able to strike trade deals that will ultimately be good for the country and offer clarity in the coming months.

He also tried to clarify past comments from earlier this year about tariffs and how he believes in them from a national security perspective, using them to protect things like rare earth materials, medical ingredients such as penicillin, and semiconductors. But that's a small part of global trade overall.

Ultimately, I think Dimon has a similar view as most investors right now, who are still struggling to see the bigger picture once everything shakes out. With Trump pausing the wide-ranging package of tariffs he announced earlier this month and showing a willingness to negotiate, the worst-case scenario seems less likely. But what will global trade ultimately look like? How will other countries view the U.S. as a reliable trade partner following this recent series of events? And how will new trade agreements and whatever tariffs end up sticking impact the economy? It's a lot to digest in a short period of time.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.