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Will GMS be Able to Report Higher Q1 Earnings & Revenues?

GMS Inc. GMS is scheduled to report first-quarter fiscal 2022 (ended Jul 31, 2021) results on Sep 2, before the opening bell.

In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 25.9% and 6.2%, respectively. On a year-over-year basis, earnings and revenues of this North American specialty distributor of interior building products grew 91.1% and 20.9%, respectively.

GMS’ earnings topped the consensus mark in all the last four quarters, with the average being 15.7%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased to $1.30 from $1.25 over the past 60 days. The estimated figure indicates 38.3% growth from the year-ago level. The consensus mark for revenues is pegged at $961.8 million, suggesting a 19.8% increase from the year-ago reported figure of $802.6 million.

GMS Inc. Price and EPS Surprise

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

Key Factors to Note

Although the global impact of the coronavirus pandemic, stiff competition and rising raw material and labor costs are expected to have been pressing concerns, a strong housing backdrop is anticipated to have benefited GMS’ fiscal first-quarter performance. A resilient housing market scenario, and solid repair & remodeling activities are expected to have benefited the company’s performance in the quarter.

Overall, strong residential end markets, favorable pricing across product categories and the acquisition of D.L. Building Materials are expected to have contributed to its top line in the quarter.

Yet, price-cost dynamics for certain product categories (particularly in wallboard) are likely to have been under pressure. This, in addition to an unfavorable mix may have weighed on its margins to some extent.

The company expects to generate year-over-year sales growth of 20% for the quarter. GMS anticipates gross margin of 31.5% for the fiscal first quarter, and coupled with SG&A leverage and incremental adjusted EBITDA margin in the range of 10-15%.

The Zacks Consensus Estimate for sales of Ceiling products is pegged at $127 million. The metric came in at $114 million a year ago.

The Zacks Consensus Estimate for sales of Steel products is pegged at $142 million. The metric came in at $110 million a year ago.

The Zacks Consensus Estimate for sales of Wallboard products is pegged at $394 million. The metric came in at $328 million a year ago.

The Zacks Consensus Estimate for sales of Other Products is pegged at $296 million. The metric came in at $250 million a year ago.

What the Zacks Model Unveils

Our proven model does not 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. Unfortunately, that is not the case here, as you will see below.

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: GMS — which shares space with RH RH, Williams-Sonoma WSM and Ethan Allen Interiors Inc. ETD in the Zacks Retail - Home Furnishings industry — currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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