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Can GMS be Able to Retain Beat Streak This Earnings Season?

Zacks Equity Research
·4-min read

GMS Inc. GMS is scheduled to report first-quarter fiscal 2023 results on Sep 1, before the market opens.

In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 11.8% and rose 95.3% year over year. Net sales also topped the consensus mark by 1.9% and improved 38.2% year over year.

GMS’ earnings topped the consensus mark in each of the last 13 quarters.

The Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share remained stable at $2.27 in the past 60 days. The estimated figure indicates a 35.9% increase from the year-ago quarter’s level. The consensus mark for net sales is pegged at $1.37 billion, suggesting a 31% increase from the year-ago reported figure.

GMS Inc. Price and EPS Surprise

 

GMS Inc. price-eps-surprise | GMS Inc. Quote

 

Key Factors to Note

Despite the ongoing raw material and labor inflation and supply chain woes, GMS is likely to have benefited from strong sale growth in all four major product categories, including Wallboard, Steel Framing, Ceilings and Complementary Products. GMS has been witnessing product inflation and volume growth in Wallboard, Ceilings and Complementary Products.

Overall, strong residential end markets, favorable pricing across product categories and acquisitions are expected to have contributed to its top line in the quarter to be reported.

The company expects to generate year-over-year sales growth of 30% and organic sales growth in low 20% range for the quarter. GMS anticipates gross margin in-line with prior year, and incremental adjusted EBITDA margin in the range of 12%. Gross margins are expected to have benefited from higher prices in wallboard, partially ailed from higher steel prices.

The Zacks Consensus Estimate for Ceiling products’ sales is pegged at $171 million, up from $141 million reported a year ago. The same for Steel products is pegged at $293 million, reflecting a rise from $196 million year over year.

The consensus mark for sales of Wallboard products is pegged at $513 million. This came in at $390 million a year ago. The same for Complementary Products is pegged at $392 million versus $318 million reported a year ago.

Per the consensus mark, Ceiling and Wallboard products’ organic sales are likely to grow 7.8% and 85.7%, respectively. The same for Steel and Complementary Products’ organic sales are likely to fall 36.2% and 44.8%, respectively.

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.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, GMS carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Arcosa, Inc. ACA, currently sporting a Zacks Rank #1, is a manufacturer of infrastructure-related products and services, serving construction, energy and transportation markets.

ACA’s expected earnings growth rate for 2022 is 7.8%. The Zacks Consensus Estimate for current-year earnings has improved 13.7% over the past 30 days.

Gibraltar Industries, Inc. ROCK, currently carrying a Zacks Rank of 2, is benefiting from its three-pillar value creation strategy, the strong housing market and solid demand for legacy and TerraSmart businesses.

ROCK’s expected earnings growth rate for 2022 is 18.7%. The Zacks Consensus Estimate for current-year earnings has remained stable over the past 60 days.

Primoris Services Corporation PRIM, a Zacks Rank #2 company, is a specialty contractor company operating in the United States and Canada. A robust backlog of more than $4 billion and solid contract awards in the Energy/Renewables and Utilities segments imply incredible momentum in the future despite supply-chain and permitting challenges. Utility-scale solar projects continued to drive progress in the Energy/Renewables segment.

PRIM’s earnings for 2022 are expected to grow 18.4%. The Zacks Consensus Estimate for current-year earnings has improved 4% in the past 30 days.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Gibraltar Industries, Inc. (ROCK) : Free Stock Analysis Report
 
Primoris Services Corporation (PRIM) : Free Stock Analysis Report
 
GMS Inc. (GMS) : Free Stock Analysis Report
 
Arcosa, Inc. (ACA) : Free Stock Analysis Report
 
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Zacks Investment Research