Griffon (GFF) AI Stock Analysis

• Market Cap: $3.89B
• Dividend Yield: 0.84%
• Average Volume (3M): 304.00K
• Price to Earnings (P/E): 17.1
• Beta (1Y): 1.14
• Revenue Growth: -3.38%
• EPS Growth: 26.22%
• Country: US
• Employees: 5,300
• Sector: Industrials
• Sector Strength: 94
• Industry: Conglomerates
• EPS (TTM): 1.23
• Shares Outstanding: 47,025,920
• 10 Day Avg. Volume: 275,308
• 30 Day Avg. Volume: 303,998
• PEG Ratio: -8.29
• Price to Book (P/B): 17.47
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 12.10
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 0.49
• Enterprise Value/Gross Profit: 8.24
• Enterprise Value/Ebitda: 5.67
• 1Y Price Target: $97.50
• Price Target Upside: 18.64% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 74 Outperform
• Price Target: $89.00 ▲(8.30%Upside)

Griffon Corporation's stock score is driven by strong technical momentum and solid financial performance, despite challenges in revenue growth and reliance on debt. The balanced sentiment from the earnings call supports the company's strategic direction, though valuation concerns slightly temper the overall outlook.

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 (GFF) is a diversified management and holding company that operates in multiple sectors, including consumer and professional products, home and building products, and defense electronics. The company is known for its wide range of offerings, from lawn and garden tools to garage doors and plastic films used in packaging. Griffon Corporation focuses on delivering high-quality products and services that cater to both consumer and industrial markets.

How the Company Makes Money

Griffon 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 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

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

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

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.62B	2.69B	2.85B	2.27B	2.41B
Gross Profit	1.02B	1.03B	936.89M	641.11M	641.43M
EBITDA	461.44M	463.13M	-121.84M	245.21M	208.09M
Net Income	209.90M	77.62M	-287.71M	79.21M	53.43M
Balance Sheet
Total Assets	2.37B	2.42B	2.82B	2.60B	2.46B
Cash, Cash Equivalents and Short-Term Investments	114.44M	102.89M	120.18M	248.65M	218.09M
Total Debt	1.71B	1.65B	1.76B	1.19B	1.21B
Total Liabilities	2.15B	2.10B	2.34B	1.80B	1.76B
Stockholders Equity	224.89M	315.24M	477.57M	807.16M	700.15M
Cash Flow
Free Cash Flow	308.87M	365.17M	26.95M	74.82M	85.01M
Operating Cash Flow	380.04M	428.77M	69.44M	111.77M	134.01M
Investing Cash Flow	-67.78M	-45.21M	-585.85M	-49.42M	-58.86M
Financing Cash Flow	-298.75M	-400.16M	393.35M	-28.25M	68.19M

Griffon Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 82.18
• 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 82.18 is above the 20-day moving average (MA) of 78.30, above the 50-day MA of 73.21, and above the 200-day MA of 72.42, indicating a bullish trend. The MACD of 2.51 indicates Negative momentum. The RSI at 69.08 is Neutral, neither overbought nor oversold. The STOCH value of 88.43 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	77 Outperform	$7.18B	29.65	16.26%	0.72%	-0.15%	39.78%
GFF	74 Outperform	$3.89B	17.10	110.90%	0.84%	-3.38%	26.22%
MDU	69 Neutral	$3.48B	13.30	9.63%	2.71%	-25.50%	-45.13%
Sector *	65 Neutral	$11.14B	15.76	5.26%	2.01%	3.16%	-25.01%
SPLP	61 Neutral	$804.33M	3.75	24.14%	―	5.83%	72.33%
CODI	58 Neutral	$513.86M	―	-4.98%	14.77%	6.77%	9.95%
MATW	53 Neutral	$764.98M	―	-17.17%	4.12%	-9.04%	-339.31%