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It's been a sad week for GMS Inc. (NYSE:GMS), who've watched their investment drop 14% to US$27.41 in the week since the company reported its quarterly result. GMS reported US$813m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.66 beat expectations, being 5.3% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, GMS' six analysts currently expect revenues in 2021 to be US$3.12b, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 211% to US$1.86. In the lead-up to this report, the analysts had been modelling revenues of US$3.11b and earnings per share (EPS) of US$1.84 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$32.00, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values GMS at US$35.00 per share, while the most bearish prices it at US$26.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the GMS' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 1.0% revenue decline a notable change from historical growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.6% annually for the foreseeable future. It's pretty clear that GMS' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that GMS' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$32.00, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for GMS going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - GMS has 4 warning signs (and 1 which is a bit concerning) we think you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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