Summary

  • Distribution company GMS Inc. received rating and price target upgrades from brokers as it reported its financial results for Q1FY24.
  • GMS’ net sales were reported to be US$1.4 billion in Q1FY24, beating analysts’ estimate of US$1.38 billion for the quarter.
  • Despite reporting a decrease in its income, GMS received a price target increase from brokers such as Stephens, Loop Capital, and Thompson Research.

GMS Inc. (NYSE: GMS) distributes specialty building products such as wallboards, suspended ceiling systems and other such building products. GMS generates majority of its revenue from the United States through its Wallboard products.

The distribution company received rating and price target renewals from brokers soon after the release of its financial results for Q1 FY24. The price target upgrade led to the company’s share price rising 2.5% on September 1, 2023, to US$71.05.

EODHD/Others data suggests that GMS has a mean recommendation rating of 2.3 on a scale of one to ten. Here, one represents a ‘strong buy’ rating and five represents a ‘strong sell' rating. Meanwhile, the data also suggests that the consensus mean price target on the stock is US$78.89 as at the close of trade on September 1, 2023.

GMS Price Chart; Image Source: GMS EODHD/Others

GMS closed at US$70.50 on September 1, 2023, marking YTD gain of 39.24%. The stock hit its 52-week high of US$76.14 on August 7, 2023.

Based on Friday’s closing price of US$70.50, GMS has a P/E ratio of 8.85x.

GMS’ Financials for Q1 FY24

GMS reported net sales of US$1.4 billion in Q1FY24, which marked a 3.7% jump over the net sales in Q1FY23. Meanwhile, GMS’ net income was US$86.8 million, or a diluted EPS of US$2.09, which was 3% lower than that in Q1FY23.

The company’s adjusted EBITDA was also lower by 1% on a year-on-year basis at US$173.3 million in Q1FY24.

Meanwhile, GMS’ liquidity remained strong, with the company reporting cash on hand of US$81.4 million and US$816.2 million of available liquidity under its revolving credit facilities.

Image source: ©2023 Krish Capital Pty Ltd.; Data source: Company Reports

GMS also boughtback common shares worth US$30.5 million, and it continued its expansion strategy. GMS acquired Home Lumber and Building Supplies in the Vancouver Island market.

Brokers raise PT on GMS as company beats analyst estimates

A total of 8 analysts have covered GMS, as per EODHD/Others data. Among these analysts, two believe GMS to be a ‘strong buy’, two others believe it to be a ‘buy’ and four recommend ‘holding’ the stock. None of the analysts have given GMS a ‘sell’ or ‘strong sell’ rating.

The company’s net sales data for Q1FY24 beat analysts’ estimates of US$1.38 billion, as per LSEG data.

Broker Loop Capital downgraded GMS to ‘hold’, while increasing its price target on the stock to US$74 on September 1, 2023. Truist Securities also lowered GMS to a ‘hold’ rating on August 31, 2023.

Alternatively, D.A. Davidson & Company maintained a ‘buy’ rating on the stock and kept its price target of US$82 intact.

Brokerage Stephens raised its price target on GMS from US$85 to US$87, rating the company ‘overweight’. The new price target presents an upside potential of 23.4% over the stock’s closing price on Friday. Thompson Research Group also increased its price target on GMS to US$87 on August 31, 2023.