GMS Inc. Posts Q2 Beat; Shares Rise

GMS Inc. (GMS) reported stronger-than-expected fiscal Q2 results. Driven by an all-time high product inflation and ongoing strength in the residential market, the company exceeded both earnings and revenue estimates.

Following the results, shares of the distributor of wallboard and suspended ceiling systems, and complementary interior construction products gained 2.4% on December 2. (See GMS stock chart on TipRanks)

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Q2 Beat

In Q2, adjusted earnings of $1.69 per share more than doubled year-over-year, exceeding analysts’ expectations of $1.60 per share. The company reported earnings of $0.66 per share for the prior-year period.

In addition, net sales jumped 41.5% year-over-year to $1.15 billion, exceeding consensus estimates of $1.06 billion. The increase in sales reflects a surge in organic net sales, which increased 31.2%. The growth was aided by inflationary pricing, healthy residential end markets, and the acquisitions of D.L. Building Materials and Westside Building Material.

However, gross margin declined 30 bps year-over-year to 32.3% due to ongoing price-cost dynamics related to price actions in wallboard.

CEO Comments

GMS CEO, John C. Turner, Jr., commented, “While commercial activity remains well below pre-COVID levels, we were pleased to see certain commercial projects that were previously on hold receive approvals to move forward. With other positive signs also emerging, we believe that we are very well positioned as we head into the next calendar year to benefit from an eventual commercial construction recovery.”

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Analysts Recommendation

The stock has a Moderate Buy consensus rating based on 1 Buys and 1 Hold. The average GMS analyst price target of $64.5 implies 11.69% upside potential from current levels. Shares have gained 97% over the past year.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 85% Bullish on GMS, compared to a sector average of 68%.

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