Core & Main, Inc. (NYSE:CNM) reported its Q3 results last week, with net sales increasing 38.7% to $1,404.8 million. More importantly, management indicated that pricing levels are likely to remain elevated through the first half of 2022, leading analysts at Berenberg Bank to believe that gross margins can remain at a 25-26% level over the next few quarters.

Nevertheless, the analysts believe the impact of normalizing commodity prices will be difficult to fully offset with some of the company’s gross margin initiatives – consequently, they believe most of the company’s EBITDA growth will be M&A-driven over the next one to two years. The analysts concede that an accelerating commodity price backdrop could result in further upwards earnings revisions in the near term.