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GMS Expands Ontario Presence With Yvon & Affiliates Acquisition
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GMS Inc. (GMS - Free Report) expands its service and product offerings in the Greater Toronto market with the acquisition of Yvon Building Supply and affiliates, including Yvon Insulation Corporation, Yvon Insulation Windsor, Laminated Glass Technologies, Inc and Right Fit Foam Insulation Ltd.
Yvon, a leading distributor of building supplies in the Ontario, Canada market, operates seven locations across the province. The acquisition enhances GMS's product offerings, including drywall, insulation, steel, ceilings and related services throughout Greater Toronto and Ontario. Yvon reported approximately CAD$195 million in net revenues for the 12 months ended May 31, 2024.
This expansion strengthens GMS Canada's presence and capabilities in southern Ontario, aiming to increase Core and Complementary Products. Funded by GMS's existing cash reserves and borrowings from its revolving credit facility, this transaction is expected to provide a slight margin improvement to GMS's overall business.
More than a quarter of the CAD$196.5 million purchase price will be paid over the next five years, aligning with GMS’s strategy of acquiring assets at or below market multiples.
Shares of GMS inched up 1.4% during the trading session on Jul 2, 2024.
Focus on Expansion
Strategic mergers and acquisitions have fueled the company's growth strategy. In 2023, GMS acquired Home Lumber & Building Supplies in Western Canada, expanding into complementary product offerings. Furthermore, the acquisitions of AMW Construction Supply in Phoenix, Arizona, and Kamco Supply Corporation in New York City have enhanced market positions in tools and fasteners and expanded GMS's presence into key metropolitan areas.
The company is focused on expanding its footprint in the Canadian market. The company's Canadian operations contributed approximately 13% of total net sales in the fiscal 2024, with more than half of these sales coming from margin-enhancing complementary products. GMS continues to target traditional acquisitions in the United States and sees significant growth opportunities in Canada.
Image Source: Zacks Investment Research
Shares of GMS have gained 13.6% in the past year compared with the Zacks Building Products - Retail industry’s 4% rise. The company has been benefiting from continued solid demand in multi-family and commercial end markets, coupled with an improving single-family backdrop. GMS' growth strategy focuses on expanding the platform through strategic acquisitions and new development opportunities while also prioritizing debt reduction.
For the fiscal 2025, the company anticipates adapting to evolving dynamics in the housing market. While current challenges such as mortgage rate fluctuations and record-high home prices persist, significant pent-up demand for single-family housing offers confidence in the medium to long term.
Zacks Rank & Key Picks
GMS currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have surged 91.7% in the past year. The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) indicates 5.2% and 42.1% growth, respectively, from year-earlier actuals.
Wingstop Inc. (WING - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter negative earnings surprise of 21.4%, on average. The stock has appreciated 115.1% in the past year.
The Zacks Consensus Estimate for WING’s 2024 sales and EPS indicates a rise of 27.9% and 37.1%, respectively, from year-ago levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 19.4%, on average. LOCO’s shares have risen 20.9% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS indicates 3.8% and 9.9% growth, respectively, from the prior-year figures.
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GMS Expands Ontario Presence With Yvon & Affiliates Acquisition
GMS Inc. (GMS - Free Report) expands its service and product offerings in the Greater Toronto market with the acquisition of Yvon Building Supply and affiliates, including Yvon Insulation Corporation, Yvon Insulation Windsor, Laminated Glass Technologies, Inc and Right Fit Foam Insulation Ltd.
Yvon, a leading distributor of building supplies in the Ontario, Canada market, operates seven locations across the province. The acquisition enhances GMS's product offerings, including drywall, insulation, steel, ceilings and related services throughout Greater Toronto and Ontario. Yvon reported approximately CAD$195 million in net revenues for the 12 months ended May 31, 2024.
This expansion strengthens GMS Canada's presence and capabilities in southern Ontario, aiming to increase Core and Complementary Products. Funded by GMS's existing cash reserves and borrowings from its revolving credit facility, this transaction is expected to provide a slight margin improvement to GMS's overall business.
More than a quarter of the CAD$196.5 million purchase price will be paid over the next five years, aligning with GMS’s strategy of acquiring assets at or below market multiples.
Shares of GMS inched up 1.4% during the trading session on Jul 2, 2024.
Focus on Expansion
Strategic mergers and acquisitions have fueled the company's growth strategy. In 2023, GMS acquired Home Lumber & Building Supplies in Western Canada, expanding into complementary product offerings. Furthermore, the acquisitions of AMW Construction Supply in Phoenix, Arizona, and Kamco Supply Corporation in New York City have enhanced market positions in tools and fasteners and expanded GMS's presence into key metropolitan areas.
The company is focused on expanding its footprint in the Canadian market. The company's Canadian operations contributed approximately 13% of total net sales in the fiscal 2024, with more than half of these sales coming from margin-enhancing complementary products. GMS continues to target traditional acquisitions in the United States and sees significant growth opportunities in Canada.
Image Source: Zacks Investment Research
Shares of GMS have gained 13.6% in the past year compared with the Zacks Building Products - Retail industry’s 4% rise. The company has been benefiting from continued solid demand in multi-family and commercial end markets, coupled with an improving single-family backdrop. GMS' growth strategy focuses on expanding the platform through strategic acquisitions and new development opportunities while also prioritizing debt reduction.
For the fiscal 2025, the company anticipates adapting to evolving dynamics in the housing market. While current challenges such as mortgage rate fluctuations and record-high home prices persist, significant pent-up demand for single-family housing offers confidence in the medium to long term.
Zacks Rank & Key Picks
GMS currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Brinker International, Inc. (EAT - Free Report) currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have surged 91.7% in the past year. The Zacks Consensus Estimate for EAT’s 2024 sales and earnings per share (EPS) indicates 5.2% and 42.1% growth, respectively, from year-earlier actuals.
Wingstop Inc. (WING - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter negative earnings surprise of 21.4%, on average. The stock has appreciated 115.1% in the past year.
The Zacks Consensus Estimate for WING’s 2024 sales and EPS indicates a rise of 27.9% and 37.1%, respectively, from year-ago levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 19.4%, on average. LOCO’s shares have risen 20.9% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS indicates 3.8% and 9.9% growth, respectively, from the prior-year figures.