GMS Inc. (NYSE:GMS) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like the results were a bit of a negative overall. While revenues of US$1.3b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.3% to hit US$1.28 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for GMS from seven analysts is for revenues of US$5.80b in 2025. If met, it would imply a credible 7.5% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be US$7.54, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.50b and earnings per share (EPS) of US$7.47 in 2025. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
The consensus price target increased 16% to US$98.25, with an improved revenue forecast carrying the promise of a more valuable business, in time. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic GMS analyst has a price target of US$112 per share, while the most pessimistic values it at US$75.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that GMS' revenue growth is expected to slow, with the forecast 6.0% annualised growth rate until the end of 2025 being well below the historical 15% p.a. growth over the last five years. Compare this to the 60 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.3% per year. Factoring in the forecast slowdown in growth, it looks like GMS is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple GMS analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - GMS has 2 warning signs we think you should be aware of.
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