US$98.25 - That's What Analysts Think GMS Inc. (NYSE:GMS) Is Worth After These Results
GMS Inc. (NYSE:GMS) came out with its third-quarter 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. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for GMS
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 reasonable 7.5% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$7.54, approximately in line with 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. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.
The analysts increased their price target 16% to US$98.25, perhaps signalling that higher revenues are a strong leading indicator for GMS's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values GMS at US$112 per share, while the most bearish prices it at US$75.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that GMS' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 6.0% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past 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 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. They also upgraded their revenue forecasts, although the latest estimates suggest that GMS will grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on GMS. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for GMS going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for GMS you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
