Why GMS Stock Is Soaring Today

A bidding war appears to be brewing for building products distribution company GMS (NYSE: GMS), and investors are excited by the possibilities.

Shares of GMS jumped 26% on Friday morning after the company was put in play by an unsolicited suitor.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

A building products bidding war?

GMS is a construction products distributor and tool supplier for consumer and commercial customers. Late Wednesday, QXO (NYSE: QXO) proposed acquiring the business for about $5 billion, or $95.20 per share in cash, a premium of 27% to GMS's 60-day volume-weighted average.

QXO is a roll-up put together by Brad Jacobs, the M&A specialist behind companies including XPO and United Rentals. The company did its first deal in April, acquiring Beacon Roofing Supply for $11 billion, and continues to seek out acquisition opportunities toward its goal to build a $50 billion business in the years to come.

GMS said its board would review the proposal. QXO set a deadline of June 24 for a response, saying it intends to go directly to GMS shareholders if a deal can't be worked out.

But QXO might have competition for the business. Late Thursday, The Wall Street Journal reported that Home Depot (NYSE: HD) has also made an offer for GMS. So far, Home Depot has not gone public with a bid, and it is unclear what price it is offering for GMS.

Is GMS stock a buy?

Though nothing is certain, with two deep-pocketed suitors, it appears likely that GMS's time as an independent company is nearing an end. And it is possible that, since there are two bidders, the sale will be for a higher price than the $95.20-per-share QXO offer.

The market is already pricing that in, bidding GMS shares as high as $104 on Friday morning.

Though both Home Depot and QXO have the resources to engage in a bidding war, both have smart management teams and solid strategies and seem unlikely to dramatically overpay. It is also unclear whether Home Depot was simply being opportunistic, or if the company considers GMS to be strategic enough to engage in a battle.

Given the uncertainty of the outcome and the considerable premium already priced into GMS shares, investors should tread carefully.

Should you invest $1,000 in Gms right now?

Before you buy stock in Gms, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Gms wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Lou Whiteman has positions in Home Depot, Qxo, and XPO. The Motley Fool has positions in and recommends Home Depot. The Motley Fool recommends XPO. The Motley Fool has a disclosure policy.