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GMS to Buy Kamco, Lifts Market Expansion & Product Categories

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GMS Inc. (GMS - Free Report) inked a deal to acquire Kamco Supply Corporation and its affiliates. The deal is expected to close in the fourth quarter of fiscal 2024, subject to certain customary closing conditions, including HSR approval.

Brooklyn, NY-based Kamco is a leading supplier of ceilings, wallboard, steel, lumber and other related construction products. It operates five distribution facilities located in the Greater New York City area and services the New York metro and tri-state area. For the trailing 12 months (ended Jun 30, 2023), Kamco generated revenues of approximately $245 million.

GMS expects to capitalize on cross-selling opportunities with Kamco and other businesses. The recent expansion in the Wallboard and Complementary product lines presents compelling opportunities for GMS to better capitalize on potential growth in the market and provide an even higher level of service to customers.

Stock Performance

Shares of GMS rose 1.1% on Dec 21, and rallied 62.2% in the past year. The Zacks Building Products - Retail industry grew 14.7% in the said period.

The company benefits from solid Ceilings and Complementary Products sales growth, expansion through accretive acquisitions and greenfield opportunities and strategic efforts to drive productivity and profitability.

It 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 second-quarter fiscal 2024, earnings and net sales surpassed their respective Zacks Consensus Estimate. However, both metrics declined on a year-over-year basis, owing to a steeper-than-anticipated decline in steel pricing and softness in single-family demand.

In October, GMS expanded its complementary product offerings through the acquisition of AMW Construction Supply in Phoenix, AZ. The company has recently opened two new greenfield yards and two AMES store locations as part of its ongoing expansion efforts.

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

The firm 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 have been discussed below.

Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 223.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) indicates an increase of 5.1% and 26.2%, respectively, from the year-ago period’s level.

Abercrombie & Fitch Co. (ANF - Free Report) sports a Zacks Rank #1 at present. It has a trailing four-quarter earnings surprise of 713%, on average.

The Zacks Consensus Estimate for ANF’s 2024 sales and EPS implies growth of 13.3% and 2,196%, respectively, from the year-ago period’s actual.

Beacon Roofing Supply, Inc. (BECN - Free Report) carries a Zacks Rank #2 (Buy) at present. It has a trailing four-quarter earnings surprise of 11.1%, on average.

The Zacks Consensus Estimate for BECN’s 2023 sales and EPS indicates growth of 7.2% and 9%, respectively, from the year-ago period’s level.

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