GMS to Report Q2 Earnings: Here's What Investors Should Know

GMS Inc. GMS is scheduled to report second-quarter fiscal 2025 results on Dec. 5, before market open.In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 8.5% and declined 19.6% year over year. Net sales missed the consensus mark by 2.7% but increased 2.8% year over year.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.GMS’ earnings topped the consensus mark in one of the trailing four quarters and missed on three occasions, delivering an average negative surprise of 3%.Trend in Estimate RevisionThe Zacks Consensus Estimate for earnings per share (EPS) has remained stable at $2.26 in the past 60 days. The estimated figure indicates a 1.7% drop from the year-ago quarter’s level of $2.30.GMS Inc. Price and EPS Surprise GMS Inc. price-eps-surprise | GMS Inc. QuoteThe consensus mark for net sales is pegged at $1.45 billion, indicating a 2.4% rise from the year-ago period.Key Factors to Note Ahead of GMS’ Q2 Earnings ReleaseGMS’ second-quarter fiscal 2025 top line is expected to have increased year over year on the back of improving single-family demand patterns. Also, the growing contributions from the acquired businesses are likely to have been encouraging for the uptrend. However, declining multi-family and commercial demand patterns might have impacted the company’s diverse product categories’ fiscal second-quarter sales performance. The company expects conditions to remain uncertain, with limited visibility beyond the second quarter due to factors like the timing of rate reductions and macroeconomic challenges.Product category-wise, the company expects consolidated organic Wallboard volume to have been flat to down low single digits and pricing to be slightly up year over year. The company expects to have maintained similar product pricing in the fiscal second quarter, following the resilience seen in wallboard pricing during fiscal 2024.Ceilings volume is likely to have been up in the low-to-single digits while pricing is anticipated to have been flat to up low single digits.Steel Framing is expected to have been down in the mid-to-high single digits while pricing is anticipated to have been up in the low-single digits. This decline in volumes indicates the current financing environment and a slowdown in many active projects.Complementary Product’s sales growth is anticipated to have been in the mid-to-high single digits.Overall, GMS expects sales growth to have been up low-to-mid single digits compared with year-ago figures. Organic sales are anticipated to have declined by low single digits due to the ongoing negative effects of steel price deflation.The Zacks Consensus Estimate of net sales for Wallboard, Ceilings and Complementary Product is pegged at $607 million, $195 million and $449.8 million, respectively. In the year-ago period, these segments reported net sales of $585.2 million, $175.3 million and $428.3 million, respectively.However, the Zacks Consensus Estimate of net sales for Steel Framing is pegged at $205.3 million, down from $232.1 million reported in the year-ago quarter.Meanwhile, the bottom line is likely to have declined year over year, primarily due to increased labor expenses and inflationary pressure on wages and benefits. Also, the company anticipates some near-term headwinds, particularly in Wallboard and Steel margins.For the fiscal second quarter, the company expects gross margin to have improved sequentially. GMS expects a gross margin in the range of 31.6-31.8% and a net income of $67-$69 million. In the year-ago period, the company reported a gross margin of 32.3% and a net income of $81 million.The adjusted EBITDA is expected to be $163-$168 million and adjusted EBITDA margins of approximately 11%. In the year-ago period, the company reported an adjusted EBITDA of $167.6 million and an adjusted EBITDA margin of $11.8%.GMS’ strategic initiatives, diverse product portfolio and continuous search for accretive inorganic opportunities are likely to have benefited its performance. The housing market remains undersupplied, with trends like AI, reshoring and infrastructure investment driving sustained construction demand. GMS is confident in its business model and well-positioned to benefit as market conditions stabilize and improve.What the Zacks Model Unveils for GMSOur 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.GMS’ Earnings ESP: GMS has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.GMS’ Zacks Rank: GMS currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Recent Retail-Wholesale ReleasesShake Shack Inc. SHAK posted third-quarter fiscal 2024 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. Both top and bottom lines also increased on a year-over-year basis.In the quarter, the company ramped up its investment in marketing strategies and programs to increase guest engagement and brand awareness, even amid a challenging market environment. 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This upside was backed by favorable comparable restaurant sales driven by menu pricing, higher traffic and a favorable menu item mix. The segment’s company-owned comps rose 14.1% from the year-ago quarter’s level. The company expects fiscal 2025 EPS to be in the range of $5.2-$5.5, up from the prior estimate of $4.35-$4.75.Must-See: Solar Stocks Poised to SkyrocketThe solar industry stands to bounce back as tech companies and the economy transition away from fossil fuels to power the AI boom.Trillions of dollars will be invested in clean energy over the coming years – and analysts predict solar will account for 80% of the renewable energy expansion. This creates an outsized opportunity to profit in the near-term and for years to come. But you have to pick the right stocks to get into.Discover Zacks’ hottest solar stock recommendation FREE.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX): Free Stock Analysis Report Brinker International, Inc. (EAT): Free Stock Analysis Report Shake Shack, Inc. (SHAK): Free Stock Analysis Report GMS Inc. (GMS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks