Griffon (GFF) AI Stock Analysis

• Market Cap: $3.79B
• Dividend Yield: 0.89%
• Average Volume (3M): 486.59K
• Price to Earnings (P/E): 60.7
• Beta (1Y): 1.07
• Revenue Growth: -3.37%
• EPS Growth: -61.83%
• Country: US
• Employees: 5,300
• Sector: Industrials
• Sector Strength: 73
• Industry: Conglomerates
• EPS (TTM): 1.50
• Shares Outstanding: 46,558,647
• 10 Day Avg. Volume: 384,563
• 30 Day Avg. Volume: 486,592
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 1.91
• Enterprise Value/Gross Profit: 4.59
• Enterprise Value/Ebitda: 17.45
• 1Y Price Target: $105.00
• Price Target Upside: 33.21% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 65 Neutral
• Price Target: $81.00 ▲(2.77% Upside)

Griffon's overall stock score reflects strong financial performance, particularly in profitability and cash flow management. However, high leverage and declining revenue growth pose risks. Technical analysis and valuation suggest caution, with mixed signals and a high P/E ratio. The earnings call highlights both strengths in certain segments and significant challenges in others.

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 Business Overview & Revenue Model

Company Description

Griffon 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 Money

Griffon generates revenue through multiple key streams, predominantly from its subsidiaries in the home and building products sector, which includes the manufacturing and sale of branded products such as residential and commercial hardware, building materials, and related services. Additionally, the company earns revenue from its defense segment, which involves providing specialized products and services to government and military clients. The revenue model is bolstered by strategic partnerships with distributors and retailers, enhancing market reach and customer access. Furthermore, ongoing investments in product innovation and operational efficiencies contribute to profitability, allowing Griffon to capture market share and respond effectively to changing consumer demands.

Griffon Financial Statement Overview

Summary

Griffon demonstrates strong profitability and cash flow management, with improving margins and cash generation. However, the company faces challenges with declining revenue growth and high leverage, which could impact long-term financial stability.

Income Statement

Griffon's income statement shows a mixed performance. The TTM (Trailing-Twelve-Months) gross profit margin is healthy at 40.95%, indicating strong cost management. However, the revenue growth rate is negative, suggesting a decline in sales. The net profit margin improved to 9.06% in TTM, reflecting better profitability compared to previous years. EBIT and EBITDA margins are also strong, indicating efficient operations. Overall, the company demonstrates solid profitability but faces challenges in revenue growth.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 0.85 in TTM, which is a significant improvement from previous years but still indicates high leverage. Return on equity is robust at 38.27%, showing effective use of equity to generate profits. The equity ratio is low, suggesting a reliance on debt financing. While the company is profitable, the high leverage poses a risk to financial stability.

Cash Flow

Griffon's cash flow statement is strong, with a positive free cash flow growth rate of 4.86% in TTM. The operating cash flow to net income ratio is 1.07, indicating good cash generation relative to net income. The free cash flow to net income ratio is high at 0.90, reflecting efficient cash management. Overall, the company shows solid cash flow performance, supporting its operational needs and financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.52B	2.62B	2.69B	2.85B	2.27B	2.07B
Gross Profit	1.05B	1.02B	948.82M	936.89M	641.11M	641.43M
EBITDA	274.99M	461.44M	463.13M	-121.84M	245.21M	187.35M
Net Income	69.97M	209.90M	77.62M	-299.07M	79.21M	53.43M
Balance Sheet
Total Assets	2.09B	2.37B	2.42B	2.82B	2.60B	2.46B
Cash, Cash Equivalents and Short-Term Investments	107.28M	114.44M	102.89M	120.18M	248.65M	218.09M
Total Debt	1.63B	1.71B	1.65B	1.76B	1.19B	1.21B
Total Liabilities	2.02B	2.15B	2.10B	2.34B	1.80B	1.76B
Stockholders Equity	63.90M	224.89M	315.24M	477.57M	807.16M	700.15M
Cash Flow
Free Cash Flow	325.74M	308.87M	365.17M	26.95M	74.82M	85.01M
Operating Cash Flow	354.99M	377.27M	428.77M	69.44M	111.77M	134.01M
Investing Cash Flow	-52.56M	-65.00M	-45.21M	-585.85M	-49.42M	-58.86M
Financing Cash Flow	-329.57M	-298.75M	-400.16M	393.35M	-28.25M	68.19M

Griffon Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 78.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 78.82 is above the 20-day moving average (MA) of 75.50, above the 50-day MA of 76.84, and above the 200-day MA of 73.60, indicating a bullish trend. The MACD of 1.08 indicates Negative momentum. The RSI at 62.33 is Neutral, neither overbought nor oversold. The STOCH value of 88.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GFF.

Griffon Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VMI	78 Outperform	$7.46B	35.18	14.51%	0.67%	-0.15%	24.55%
GFF	65 Neutral	$3.79B	60.69	48.69%	0.89%	-3.37%	-61.83%
Sector *	63 Neutral	$10.73B	15.32	7.39%	2.01%	2.86%	-14.57%
CODI	59 Neutral	$547.72M	―	-4.98%	13.83%	6.77%	9.95%
MDU	54 Neutral	$3.29B	15.31	7.98%	2.87%	-40.60%	-47.10%
MATW	53 Neutral	$766.69M	―	-12.81%	4.01%	-11.13%	-351.71%
IEP	51 Neutral	$4.83B	―	-21.56%	23.72%	-11.23%	-6.85%