GMS Gears Up to Report Q4 Earnings: Here's What to Expect
GMS Inc. GMS is scheduled to report fourth-quarter fiscal 2023 results on Jun 22, before market open.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 0.5% but rose 6.3% year over year. Net sales topped the consensus mark by 2.4% and increased 7% year over year.
GMS’ earnings topped the consensus mark in 14 of the last 15 quarters.
The Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share remained stable at $1.91 in the past 60 days. The estimated figure indicates an 8.6% decrease from the year-ago quarter’s level. The consensus mark for net sales is pegged at $1.27 billion, suggesting a 1.4% fall from the year-ago reported figure.
GMS Inc. Price and EPS Surprise
GMS Inc. price-eps-surprise | GMS Inc. Quote
Key Factors to Note
GMS is likely to have generated lower earnings and sales in the fiscal fourth quarter, thanks to moderate housing demand and repair and remodeling activities. It has also been witnessing inflation and supply-related challenges concerning some of its products.
GMS has been witnessing a decline in Single-family demand across most of the markets served due to a slowdown in permits and starts activity and a reduced construction backlog.
The company expects sales to be flat to down in low-single-digits for the quarter. Wallboard volumes are expected to be up more than 20% in Multi-family, increase single digit in Commercial and be down in high-teens in Single-family.
It also projects mid- to high-teen inflation in wallboard pricing, flat prices in ceilings and slight inflation in complementary products for the fiscal fourth quarter. Steel Framing pricing is likely to decline by 20-25%.
GMS anticipates gross margin to be nearly 32% and adjusted EBITDA within $139-$144 million. In the year-ago period, gross margin was 32% and adjusted EBITDA was $154.2 million.
The Zacks Consensus Estimate for Ceiling products’ sales is pegged at $143 million, down from $149 million reported a year ago. The same for Steel Framing is pegged at $197 million, reflecting a significant fall from $277 million year over year.
The consensus mark for sales of Wallboard products is pegged at $535 million, up from $491 million a year ago. The same for Complementary products is pegged at $396 million versus $372 million reported a year ago.
Per the consensus mark, Wallboard and Complementary products’ organic sales are likely to grow by 9% and 5%, respectively. The same for Ceiling and Steel Framing’s organic sales are likely to fall by 4% and 29%, respectively.
What the Zacks Model Unveils
Our proven model doesn’t 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. This is not the case here, as elaborated 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: Currently, GMS carries a Zacks Rank #3.
Stocks Poised to Beat Earnings Estimates
Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat:
McDonald's Corporation MCD has an Earnings ESP of +0.27% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
MCD is expected to register a 7.8% growth in earnings for the to-be-reported quarter. It delivered better-than-expected earnings in each of the last four quarters, the average surprise being 6.9%.
Jack in the Box Inc. JACK has an Earnings ESP of +0.26% and carries a Zacks Rank #3.
JACK is expected to register a 3.6% decline in earnings for the to-be-reported quarter. Notably, it delivered better-than-anticipated earnings in two of the last four quarters and missed on other two occasions, the average surprise being 7.9%.
Starbucks Corporation SBUX has an Earnings ESP of +1.22% and carries a Zacks Rank #3.
SBUX is expected to register an increase of 14.3% in earnings for the to-be-reported quarter. It delivered better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 8.3%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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