GMS Inc. GMS is scheduled to report first-quarter fiscal 2025 results on Aug. 29, before market open.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 5.4% and declined 8.5% year over year. Net sales missed the consensus mark by 0.4% but increased 8.4% year over year.
GMS’ earnings topped the consensus mark in two of the last four quarters and missed on two occasions, delivering an average negative surprise of 0.8%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $2.11 in the past 60 days. The estimated figure indicates a 12.1% drop from the year-ago quarter’s level of $2.40.
GMS Inc. Price and EPS Surprise
GMS Inc. price-eps-surprise | GMS Inc. Quote
The consensus mark for net sales is pegged at $1.49 billion, indicating a 5.6% rise from the year-ago period.
Key Factors to Note
The top-line performance of GMS is expected to have gained year over year on the back of improving single-family demand patterns. Also, the growing contributions from the acquired businesses are likely to have been encouraging for the uptrend. However, declining multi-family and commercial demand patterns might have reflected in the company’s diverse product categories’ fiscal first-quarter sales performance.
Product category-wise, the company expects Wallboard volume to be up in low-to-mid single digits and pricing to be flat year over year. Ceilings volume is likely to be up in the low-to-mid teens while pricing is anticipated to be up in the low-to-mid single digits. Steel Framing is expected to be in the low-to-mid single digits while pricing is anticipated to be in the low teens. Complementary Product’s sales growth is anticipated to be in the mid-single digits, including the benefits of recent acquisitions.
Overall, GMS expects sales growth to be in the mid-single digits.
The Zacks Consensus Estimate of net sales for Wallboard, Ceilings, Steel Framing and Complementary Product is pegged at $605.5 million, $206.7 million, $224.8 million and $455.9 million, respectively. In the year-ago period, these segments reported net sales of $571.4 million, $175.2 million, $236.76 million and $426.2 million, respectively.
Meanwhile, the bottom line is likely to have declined year over year, primarily due to increased labor expenses and inflationary pressure on wages and benefits. Also, the company anticipates some near-term headwinds, particularly in Wallboard and Steel margins.
For the fiscal first quarter, GMS expects a gross margin of nearly 31.5%, net income of $77-$79 million and adjusted EBITDA of $160-$165 million. In the year-ago period, the company reported a gross margin of 32%, net income of $89.5 million and adjusted EBITDA of $173.3 million.
GMS’ strategic initiatives, diverse product portfolio and continuous search for accretive inorganic opportunities are likely to have benefited its performance.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for GMS this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below.
Earnings ESP: The company has an Earnings ESP of +2.84%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: GMS currently carries a Zacks Rank #4 (Sell).
Recent Releases
Williams-Sonoma Inc. WSM reported mixed results for second-quarter fiscal 2024 (ended July 30, 2024).
The company’s earnings beat the Zacks Consensus Estimate but net revenues missed the same. On a year-over-year basis, the top line declined but the bottom line increased on the back of the two-for-one stock split completed in July.
Red Robin Gourmet Burgers, Inc. RRGB posted mixed second-quarter fiscal 2024 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same.
The top line increased year over year while the bottom line fell from the prior-year quarter’s level.
Brinker International, Inc. EAT reported mixed fourth-quarter fiscal 2024 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same.
In fiscal 2025, management anticipates total revenues to be in the range of $4.55-$4.62 billion. Capital expenditures are expected to be in the $195-$215 million band. EAT projects fiscal 2025 EPS to be in the range of $3.8-$4, down from the prior estimate of $4.35-$4.75.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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