Griffon (GFF) AI Stock Analysis

• Market Cap: $3.38B
• Dividend Yield: 0.95%
• Average Volume (3M): 464.30K
• Price to Earnings (P/E): 14.5
• Beta (1Y): 1.06
• Revenue Growth: -2.47%
• EPS Growth: 249.49%
• Country: US
• Employees: 5,300
• Sector: Industrials
• Sector Strength: 77
• Industry: Conglomerates
• EPS (TTM): 1.23
• Shares Outstanding: 47,530,098
• 10 Day Avg. Volume: 462,417
• 30 Day Avg. Volume: 464,297
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.45
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 4.80
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $91.33
• Price Target Upside: 28.78% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

Griffon has a solid financial footing with robust cash flow and profitability, though challenges such as high leverage and revenue declines in certain segments pose risks. The technical indicators suggest mixed momentum, while the valuation is moderate. The earnings call provided a positive outlook on cash flow and profitability, despite some operational challenges.

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 Corporation generates revenue through the manufacturing and sale of a wide range of consumer and professional products as well as home and building products. In the Consumer and Professional Products segment, revenue is primarily derived from the sale of tools, lawn and garden products, and storage solutions under well-known brands. The Home and Building Products segment contributes to revenue through the sale of garage doors, rolling steel doors, and related components. Griffon leverages its extensive distribution networks and relationships with major retailers and distributors to ensure product availability and maximize sales. The company also benefits from strategic acquisitions that expand its product offerings and market reach, thereby enhancing its revenue potential.

Griffon Financial Statement Overview

Summary

Griffon exhibits strong profitability with a robust gross profit margin and efficient cash flow management. However, the company faces challenges with declining revenue and high leverage, which could pose financial risks.

Income Statement

The company demonstrates strong profitability with a gross profit margin of 40.7% and a net profit margin of 9.1% for TTM. However, revenue has been slightly declining in recent years, with a 8.2% decrease from 2022 to 2023. Despite this, the EBIT and EBITDA margins are robust, indicating efficient cost management.

Balance Sheet

Griffon has a high debt-to-equity ratio of 0.83 in TTM, indicating significant leverage, which could pose financial risk if not managed properly. The return on equity is strong at 104.7%, suggesting effective use of equity to generate profits. However, the equity ratio of 9.8% shows a low proportion of equity financing, raising concerns about financial stability.

Cash Flow

The cash flow statement highlights a healthy cash generation capability, with a strong operating cash flow to net income ratio of 1.58 in TTM. The free cash flow has grown by 17.9% from 2023 to 2024, indicating robust cash flow management, which is crucial for maintaining liquidity and funding operations.

Breakdown
Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 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
	EBIT
398.30M	196.89M	335.06M	170.58M	155.03M
	EBITDA
461.44M	463.13M	-121.84M	245.21M	208.09M
	Net Income Common Stockholders
209.90M	77.62M	-287.71M	79.21M	53.43M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
114.44M	102.89M	120.18M	248.65M	218.09M
	Total Assets
2.37B	2.42B	2.82B	2.60B	2.46B
	Total Debt
1.71B	1.65B	1.76B	1.19B	1.21B
	Net Debt
1.59B	1.55B	1.64B	946.23M	996.78M
	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: 70.92
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 70.92 is above the 20-day moving average (MA) of 68.54, above the 50-day MA of 69.78, and above the 200-day MA of 70.66, indicating a bullish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 54.67 is Neutral, neither overbought nor oversold. The STOCH value of 57.95 is Neutral, 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	75 Outperform	$6.09B	17.84	22.84%	0.81%	-0.57%	116.12%
GFF	72 Outperform	$3.38B	14.48	93.05%	0.95%	-2.47%	249.49%
MDU	68 Neutral	$3.58B	12.67	10.51%	2.92%	-22.50%	-32.26%
Sector *	64 Neutral	$4.25B	11.69	5.23%	249.83%	4.04%	-9.46%
CODI	59 Neutral	$1.30B	―	-4.98%	5.80%	6.77%	9.95%
SPLP	58 Neutral	$731.36M	3.32	25.02%	―	6.37%	86.42%
MATW	48 Neutral	$582.96M	―	-17.17%	5.21%	-9.04%	-339.31%