Shareholders might have noticed that GMS Inc. (NYSE:GMS) filed its quarterly result this time last week. The early response was not positive, with shares down 3.3% to US$97.05 in the past week. Statutory earnings per share fell badly short of expectations, coming in at US$1.35, some 22% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$1.5b. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, GMS' eight analysts currently expect revenues in 2025 to be US$5.64b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 8.9% to US$5.14 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$5.67b and earnings per share (EPS) of US$5.83 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

Despite cutting their earnings forecasts,the analysts have lifted their price target 6.6% to US$100, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on GMS, with the most bullish analyst valuing it at US$113 and the most bearish at US$86.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. 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 1.8% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that GMS is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that GMS' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple GMS analysts - going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for GMS that you should be aware of.

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