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GMS Buys AMW, Fortifies Complementary Product Offerings

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GMS Inc. (GMS - Free Report) expands its complementary product offerings through the acquisition of AMW Construction Supply (“AMW”) in Phoenix, AZ. The company has recently opened two new greenfield yards and two AMES store locations as part of its ongoing expansion efforts.

This acquisition strengthens GMS's position by adding expertise in tools and fasteners for residential and commercial projects. AMW’s experienced team enhances GMS's service-focused culture, expanding the company's offerings in the Phoenix market and the surrounding region. GMS aims to leverage AMW’s capabilities to grow this margin-accretive category, emphasizing its commitment to expanding and enhancing its Complementary Product portfolio.

Furthermore, these new openings strengthen GMS's market presence in Jessup, MD, and Elizabeth, NJ, enhancing service and product offerings under Capitol Building Supply, Inc. This expansion extends GMS's reach across the Northeast, reinforcing its capabilities in key markets. Additionally, the growth of the AMES platform with new store locations in San Antonio, TX, and Palm Desert, CA, bolsters GMS's footprint, aligning with the company's strategy to broaden its service and product accessibility in different regions.

Focus on Expansion

Shares of GMS have strongly outperformed the Zacks Building Products - Retail industry in the past year. GMS gained 37.6% in the period compared with the industry’s 3.8% rise. The company benefits from strong Complementary Products sales growth, expansion through accretive acquisitions and greenfield opportunities, and strategic efforts to drive productivity and profitability.

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The company focuses on adapting to the evolving market conditions and customer needs, strengthening its commitment to service. The company emphasizes growth through strategic acquisitions and greenfield opportunities, aiming to boost sales of core products and complementary offerings.

During first-quarter fiscal 2024, the company acquired the Ceilings-Focused location in New York City and Jawl Lumber Corporation in Vancouver Island, Canada. This reflects the company's ongoing efforts to expand its presence and deliver comprehensive solutions to customers.

By leveraging core product sales and customer relationships, GMS is dedicated to enhancing customer value by meeting broader needs. This approach involves introducing new materials and brands, redesigning stores for better product showcasing, and investing in personnel and capabilities to drive more focused sales. Complementary Products sales in the fiscal first quarter reached $426.2 million for the quarter, reflecting a 7.7% year-over-year growth or 6% on a same-day basis, driven by positive contributions from acquisitions.

The company remains optimistic and expects to balance investing in strategic initiatives, including M&A, and strengthening the balance sheet by paying down debt.

Zacks Rank & Key Picks

GMS currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Retail-Wholesale sector are:

Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 724.8%, on average. Shares of ANF have surged 242.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ANF’s 2024 sales and earnings per share (EPS) implies increases of 10% and 1,644%, respectively, from the year-ago period’s levels.

Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 35%, on average. The stock has gained 13.4% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests a rise of 19.2% and 13%, respectively, from the year-ago period’s levels.

Chipotle Mexican Grill, Inc. (CMG - Free Report) sports a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 4.8%, on average. Shares of CMG have gained 21.4% in the past year.

The Zacks Consensus Estimate for CMG’s 2023 sales and EPS indicates a 13.6% and a 31.8% growth, respectively, from the year-ago period’s levels.

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