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Griffon Corp. (GFF)
NYSE:GFF

Griffon (GFF) AI Stock Analysis

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Griffon

(NYSE:GFF)

Rating:71Outperform
Price Target:
$78.00
▲(8.41%Upside)
Griffon's strong financial performance, underpinned by solid profitability and cash generation, is slightly offset by revenue volatility and high debt reliance. Valuation metrics are favorable, providing value with a reasonable P/E ratio and dividend yield. The earnings call highlights both achievements and existing challenges, contributing positively to the overall score.
Positive Factors
EBITDA Margin Achievement
HBP EBITDA margin exceeded expectations, reaching 31.7%, supported by increased revenue and reduced material costs.
Improved Profitability
CPP profitability improved significantly, with EBITDA rising to $25 million from $14 million in the prior year due to stronger revenue and improved production costs.
Share Buyback Program
Griffon's capital allocation remains supportive with a new $400 million share buyback program and guidance of $1 billion+ free cash flow over the next three years.
Negative Factors
Earnings Expectations
FQ3 results were slightly below Street estimates, but more importantly, we sensed investors were also looking for upside (combination of seasonality and recent trends), suggesting a higher bar to begin with.
Impact of Steel Prices
Lower sales and higher costs were the driver, with management indicating higher steel prices hurt margins by 'a few hundred bps' this quarter.
Revenue Decline
HBP revenue and margins lighter than we modeled. HBP revenue declined -2% (vs. our -1% estimate), as increased residential volumes were offset by lower commercial volumes.

Griffon (GFF) vs. SPDR S&P 500 ETF (SPY)

Griffon Business Overview & Revenue Model

Company DescriptionGriffon Corporation, through its subsidiaries, provides consumer and professional, and home and building products in the United States, Europe, Canada, Australia, and internationally. Its Consumer and Professional Products segment manufactures and markets long-handled tools and landscaping products for homeowners and professionals; wood and wire closet organization, general living storage, and wire garage storage products to home center retail chains, mass merchandisers, and direct-to builder professional installers; wheelbarrows and lawn carts; snow, striking, and hand tools; planters and lawn accessories; garden hoses; and pruners, loppers, shears, and other tools, as well as cleaning products for professional, home, and industrial use. The company's Home & Building Products segment manufactures and markets residential and commercial garage doors for professional dealers and various home center retail chains; and rolling steel door and grille products for commercial, industrial, institutional, and retail uses. It sells its products under the True Temper, AMES, ClosetMaid, Clopay, Ideal, Holmes, CornellCookson, Garant, Harper, UnionTools, Westmix, Cyclone, Southern Patio, Northcote Pottery, Nylex, Hills, Kelkay, Tuscan Path, La Hacienda, Kelso, Dynamic Design, Apta, Quatro Design, Razor-Back, Jackson, Darby, Trojan, Supercraft, NeverLeak, Maximum Load, SuperSlide, ShelfTrack, MasterSuite, Suite Symphony, ExpressShelf, Style+, and SpaceCreations brand names. The company was formerly known as Instrument Systems Corporation and changed its name to Griffon Corporation in June 1992. Griffon Corporation was founded in 1959 and is headquartered in New York, New York.
How the Company Makes MoneyGriffon Corporation generates revenue through its diverse portfolio of businesses, each contributing to the company's overall earnings. The Consumer and Professional Products segment, which includes brands like AMES and ClosetMaid, generates revenue by manufacturing and selling tools, storage solutions, and outdoor products. The Home and Building Products segment, featuring brands like Clopay, provides revenue through the sale of residential and commercial garage doors as well as sectional doors. Additionally, the Defense Electronics segment contributes to revenue by offering advanced electronic and information solutions for defense applications, primarily through its Telephonics subsidiary. Key factors contributing to Griffon's earnings include strategic acquisitions that broaden its product offerings, strong brand recognition, and a focus on operational efficiency. The company also benefits from significant partnerships and long-term contracts in its defense segment, ensuring a steady stream of income.

Griffon Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q2-2025)
|
% Change Since: 6.25%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
Griffon Corporation's earnings call reflected a balanced view with both positive and negative aspects. While the Home and Building Products segment showed strong EBITDA margins and received recognition for innovation, the company faced revenue declines and challenges from tariffs in the Consumer and Professional Products segment. Efforts to mitigate these challenges were highlighted, along with a commitment to maintaining financial guidance for the fiscal year.
Q2-2025 Updates
Positive Updates
Strong EBITDA Margin in Home and Building Products
The Home and Building Products segment maintained a better than 30% EBITDA margin, driven by steady residential performance and favorable mix.
Recognition for Innovation
Clopay was recognized as the Best of IBS at the February 2025 NAHB International Builders Show for its innovative VertiStack Avante garage door.
Successful Stock Repurchase Program
During the second quarter, Griffon repurchased $31 million of stock, reducing outstanding shares by 17.4% since April 2023.
Stable Dividend Growth
Griffon declared a regular quarterly dividend, marking the 55th consecutive quarterly dividend, with an annualized compounded growth rate of more than 18% since 2012.
Improved EBITDA Performance in Consumer and Professional Products
The Consumer and Professional Products segment improved its EBITDA by 18% year-over-year, driven by the transition to an asset-light business model and successful integration of the Pope acquisition in Australia.
Negative Updates
Revenue and EBITDA Decline
Second quarter revenue decreased by 9% and adjusted EBITDA by 11% compared to the prior year, with a decline in gross profit and increased labor and distribution costs.
Impact of Tariffs on Consumer and Professional Products
Approximately $325 million of CPP revenue is affected by China-based tariffs, with efforts ongoing to mitigate the impact through supplier negotiations and cost management.
Weak Consumer Demand in North America and UK
The Consumer and Professional Products segment experienced a 13% decrease in revenue due to reduced consumer demand in North America and the UK.
Free Cash Flow Decline
Free cash flow during the quarter was $3 million compared to $21 million in the prior year.
Company Guidance
During the Griffon Corporation's Fiscal Second Quarter 2025 Earnings Conference Call, the company maintained its financial guidance for fiscal 2025, projecting $2.6 billion in revenue and $575 million to $600 million in segment adjusted EBITDA. The Home and Building Products (HBP) segment reported over a 30% EBITDA margin, despite a 6% year-over-year revenue decrease, while the Consumer and Professional Products (CPP) segment faced a 13% revenue decline but achieved an 18% increase in adjusted EBITDA, driven by global sourcing initiatives. The company repurchased $31 million in stock during the quarter, and the board approved a $0.18 per share dividend. Griffon's strategic focus remains on managing tariff impacts and optimizing capital allocation to enhance shareholder value.

Griffon Financial Statement Overview

Summary
Griffon demonstrates strong profitability and operational efficiency with solid margins and cash generation. However, revenue volatility and reliance on debt raise concerns about growth sustainability and financial stability. Continued focus on revenue growth and strengthening the equity base could enhance its financial standing.
Income Statement
75
Positive
Griffon's income statement shows a stable gross profit margin of approximately 40.9% in TTM, indicating strong operational efficiency. The net profit margin improved significantly to 9.1%, reflecting enhanced profitability. Revenue growth has been volatile, with a decline in recent periods, suggesting challenges in sustaining top-line growth. EBIT and EBITDA margins are healthy at 16.2% and 19.2%, respectively, showing good operational leverage.
Balance Sheet
65
Positive
Griffon's balance sheet shows a manageable debt-to-equity ratio of 0.85, indicating a moderate level of leverage. The equity ratio is relatively low at 9.2%, suggesting a high reliance on debt financing. Return on equity is strong at 107.7%, driven by improved net income, though it raises concerns about sustainability given the low equity base.
Cash Flow
70
Positive
The cash flow statement reveals a robust operating cash flow to net income ratio of 1.53, indicating high-quality earnings. Free cash flow to net income is also strong at 1.38, showing effective cash generation. However, free cash flow growth has been inconsistent, highlighting potential challenges in maintaining cash flow growth.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
2.55B2.62B2.69B2.85B2.27B2.41B
Gross Profit
1.04B1.02B1.03B936.89M641.11M641.43M
EBIT
414.27M398.30M196.89M335.06M170.58M155.03M
EBITDA
507.47M461.44M463.13M-121.84M245.21M208.09M
Net Income Common Stockholders
231.19M209.90M77.62M-287.71M79.21M53.43M
Balance SheetCash, Cash Equivalents and Short-Term Investments
64.79M114.44M102.89M120.18M248.65M218.09M
Total Assets
2.26B2.37B2.42B2.82B2.60B2.46B
Total Debt
1.31B1.71B1.65B1.76B1.19B1.21B
Net Debt
1.24B1.59B1.55B1.64B946.23M996.78M
Total Liabilities
1.76B2.15B2.10B2.34B1.80B1.76B
Stockholders Equity
494.69M224.89M315.24M477.57M807.16M700.15M
Cash FlowFree Cash Flow
319.43M308.87M365.17M26.95M74.82M85.01M
Operating Cash Flow
354.54M380.04M428.77M69.44M111.77M134.01M
Investing Cash Flow
-47.02M-67.78M-45.21M-585.85M-49.42M-58.86M
Financing Cash Flow
-300.70M-298.75M-400.16M393.35M-28.25M68.19M

Griffon Technical Analysis

Technical Analysis Sentiment
Positive
Last Price71.95
Price Trends
50DMA
69.42
Positive
100DMA
71.57
Positive
200DMA
70.98
Positive
Market Momentum
MACD
0.21
Negative
RSI
58.23
Neutral
STOCH
89.60
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GFF, the sentiment is Positive. The current price of 71.95 is above the 20-day moving average (MA) of 70.10, above the 50-day MA of 69.42, and above the 200-day MA of 70.98, indicating a bullish trend. The MACD of 0.21 indicates Negative momentum. The RSI at 58.23 is Neutral, neither overbought nor oversold. The STOCH value of 89.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GFF.

Griffon Risk Analysis

Griffon disclosed 32 risk factors in its most recent earnings report. Griffon reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Griffon Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
VMVMI
80
Outperform
$6.54B18.9522.84%0.76%-0.57%116.12%
GFGFF
71
Outperform
$3.31B14.57110.90%0.97%-3.38%26.22%
MDMDU
68
Neutral
$3.43B13.139.63%3.06%-25.50%-45.13%
66
Neutral
$4.49B12.345.40%248.65%4.13%-12.33%
58
Neutral
$758.36M3.5524.14%5.83%72.33%
52
Neutral
$685.60M-17.17%4.48%-9.04%-339.31%
48
Neutral
$475.49M-4.98%15.24%6.77%9.95%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GFF
Griffon
71.95
7.53
11.69%
CODI
Compass Diversified Holdings
6.32
-14.90
-70.22%
MATW
Matthews International
23.04
-2.70
-10.49%
MDU
Mdu Resources Group
16.76
3.37
25.17%
SPLP
Steel Partners Holdings
40.00
2.75
7.38%
VMI
Valmont
322.86
62.99
24.24%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.