Let’s dig into the relative performance of GMS (NYSE:GMS) and its peers as we unravel the now-completed Q4 industrial distributors earnings season.
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Distributors that boast a reliable selection of products–everything from hardhats and fasteners for jet engines to ceiling systems–and quickly deliver goods to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is still a real threat, forcing investment in omnichannel capabilities to better interact with customers. Additionally, distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
The 28 industrial distributors stocks we track reported a mixed Q4. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 16.6% since the latest earnings results.
GMS (NYSE:GMS)
Founded in 1971, GMS (NYSE:GMS) distributes specialty building materials including wallboard, ceilings, and insulation products, to the construction industry.
GMS reported revenues of $1.26 billion, flat year on year. This print fell short of analysts’ expectations by 2.5%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ organic revenue estimates but a significant miss of analysts’ EBITDA estimates.
GMS Total Revenue
Unsurprisingly, the stock is down 10.9% since reporting and currently trades at $70.19.
Spun off from National Oilwell Varco, DistributionNOW (NYSE:DNOW) provides distribution and supply chain solutions for the energy and industrial end markets.
DistributionNOW reported revenues of $571 million, up 2.9% year on year, outperforming analysts’ expectations by 3.4%. The business had an incredible quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
DistributionNOW Total Revenue
The market seems happy with the results as the stock is up 14.7% since reporting. It currently trades at $16.21.
Producing bomb casings and tracks for vehicles during WWII, MRC (NYSE:MRC) offers pipes, valves, and fitting products for various industries.
MRC Global reported revenues of $664 million, down 13.5% year on year, falling short of analysts’ expectations by 8.7%. It was a disappointing quarter as it posted a miss of analysts’ Fittings revenue estimates and a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 14.5% since the results and currently trades at $9.50.
With a focus on the CFM56 engine that powers Boeing and Airbus’s planes, FTAI Aviation (NASDAQ:FTAI) sells, leases, maintains, and repairs aircraft engines.
FTAI Aviation reported revenues of $498.8 million, up 59.5% year on year. This result beat analysts’ expectations by 0.9%. Taking a step back, it was a satisfactory quarter as it also logged a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ adjusted operating income estimates.
FTAI Aviation delivered the fastest revenue growth among its peers. The stock is down 39.1% since reporting and currently trades at $85.31.
Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.
Global Industrial reported revenues of $302.3 million, down 5.6% year on year. This print missed analysts’ expectations by 1.2%. Overall, it was a slower quarter as it also recorded a miss of analysts’ EPS estimates.
The stock is down 19.1% since reporting and currently trades at $19.67.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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