Stephens will organize important meetings in several Midwest cities, focusing on GMS. These gatherings are scheduled to take place in Milwaukee on May 13, Chicago on May 14, and Cincinnati on May 15. The aim is to explore companies with strong fundamentals that could safeguard portfolios against market volatility. This initiative is part of a broader effort to provide investors with insights on undervalued stocks that are resilient to market fluctuations.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for GMS Inc (GMS, Financial) is $83.33 with a high estimate of $111.00 and a low estimate of $65.00. The average target implies an upside of 8.42% from the current price of $76.87. More detailed estimate data can be found on the GMS Inc (GMS) Forecast page.
Based on the consensus recommendation from 8 brokerage firms, GMS Inc's (GMS, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for GMS Inc (GMS, Financial) in one year is $77.72, suggesting a upside of 1.11% from the current price of $76.865. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the GMS Inc (GMS) Summary page.
GMS Key Business Developments
Release Date: March 06, 2025
- Net Sales: $1.3 billion, flat compared to the same period a year ago.
- Organic Sales Decline: 6.7% for the quarter.
- Gross Margin: 31.2%, down from 33% a year ago.
- Net Loss: $21.4 million compared to net income of $51.9 million in the prior year period.
- Adjusted EBITDA: $93 million, a decrease of 27.3% year-over-year.
- Adjusted EBITDA Margin: Declined from 10.2% to 7.4% this quarter.
- Free Cash Flow: $83.1 million, 89% of adjusted EBITDA for the quarter.
- Wallboard Sales: $501.7 million, down 3.6% year-over-year.
- Ceilings Sales: Up 16% year-over-year.
- Steel Framing Sales: Down 11.6% for the quarter.
- Complementary Products Sales: $398.6 million, grew 5.3% year-over-year.
- SG&A Expense: $310.8 million, up from $295.7 million.
- Cash on Hand: $59 million.
- Available Liquidity: $469.7 million under revolving credit facilities.
- Net Debt Leverage: 2.4 times at the end of the quarter.
- Capital Expenditures: $11 million for the quarter.
- Share Repurchase: 445,000 shares for $39.3 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GMS Inc (GMS, Financial) reported net sales of $1.3 billion for the third quarter, which remained flat compared to the same period a year ago, despite challenging market conditions.
- The company successfully implemented $30 million in annualized cost reductions, with an additional $20 million expected to be realized by the first quarter of fiscal 2026.
- GMS Inc (GMS) continues to generate significant cash flow, with free cash flow reaching 89% of adjusted EBITDA for the quarter, the highest third-quarter level since the start of COVID.
- The company is focused on expanding its Complementary Products category, which grew 5.3% year-over-year, marking its 19th consecutive quarter of growth.
- GMS Inc (GMS) is well-positioned to capitalize on future growth opportunities, supported by a solid balance sheet and strategic investments in technology and efficiency optimization.
Negative Points
- The company's third-quarter performance came in below expectations due to a challenging macro environment, with organic sales declining 6.7% for the quarter.
- Gross margin decreased to 31.2% from 33% a year ago, impacted by vendor incentive headwinds and transactional price cost pressure.
- US commercial revenues were down 7.8% organically compared to last year, with activity levels expected to remain constrained due to tight lending conditions.
- The residential market faced headwinds, with single-family housing starts expected to remain muted for at least the current calendar year due to affordability challenges and economic uncertainty.
- GMS Inc (GMS) recognized a $42.5 million noncash goodwill impairment charge during the quarter, contributing to a GAAP net loss of $21.4 million compared to net income of $51.9 million in the prior year period.
