Griffon Corporation (GFF), a leading provider of consumer and professional, and home and building products, reported solid fourth quarter and fiscal year 2024 results, which ended on September 30, 2024. The company's total revenue of $659.67 million for the fourth quarter surpassed the consensus estimate of $641.24 million. Also, its adjusted EPS was $1.47, compared to analysts’ expectations of $1.18.
During the fiscal year, the company was able to expand its operations through strategic initiatives. Also, the consistent performance of its Home and Building Products segment, coupled with improving Consumer and Professional Products segment profitability, benefited its financial performance.
Through its strong performance, Griffon was also able to generate $326 million of free cash flow and return to its shareholders in the form of dividends and share repurchases. Through its subsidiaries, the company is widening its horizons and opening new prospects of growth for the future.
According to a report by Market Research Report, the construction materials market is forecasted to grow to a staggering $1.82 trillion by 2032 at a CAGR of 4.2%. Factors like government initiatives promoting smart cities, infrastructural development, and environmentally friendly building techniques are driving and enhancing market growth.
For the fiscal year 2025, GFF expects revenue of $2.6 billion, and its adjusted EBITDA is expected to range from $575 million to $600 million, where its 2025 HBP and CPP segment revenue will both be in line with 2024. The company projects 2025 EBITDA margin at HBP to continue to be in excess of 30% and at CPP to be in excess of 9%.
Shares of GFF have gained 17.5% over the past six months to close its last trading session at $78.49. The stock has also soared 45.1% over the past year.
Let’s look at factors that could influence GFF’s performance in the upcoming months.
Recent Developments
On July 1, GFF’s subsidiary, The AMES Companies, Inc., acquired Pope, a leading Australian provider of residential watering products, from The Toro Company (TTC), marking AMES’s seventh acquisition in Australia since 2013. The acquisition expanded the company’s product portfolio in the Australian market. Pope is projected to contribute approximately $25 million in annualized revenue.
Solid Financials
For the fourth quarter that ended September 30, 2024, GFF’s total revenues increased 2.8% year-over-year to $659.67 million. Its adjusted gross profit grew 7.8% from the year-ago value to $271.05 million. The company’s income from operations rose 40.6% from the prior year’s quarter to $111.67 million.
Furthermore, the company’s adjusted net income and adjusted EPS came in at $70.94 million and $1.47, up 12.5% and 23.5% from the prior year’s quarter, respectively. The company's adjusted EBITDA of $137.53 million indicates growth of 13.4% year-over-year.
Also, GFF’s cash and equivalents stood at $114.44 million as of September 30, 2024, compared to $102.89 million as of September 30, 2023.
Robust Historical Growth
GFF’s revenue grew at a CAGR of 4.9% over the past three years, while its EBITDA improved at a CAGR of 26.9%. Its EBIT increased at a CAGR of 31.7% over the same period, while the company's net income and EPS grew at respective CAGRs of 38.4% and 41.7% over the same time frame.
Further, the company’s normalized net income increased at a CAGR of 37.5% over the same timeframe.
Favorable Analyst Estimates
Analysts expect GFF’s revenue for the third quarter (ending June 2025) to come in at $667.64 million, indicating an increase of 3.1% year-over-year. The consensus EPS estimate of $1.54 for the same period reflects a 24% year-over-year improvement. Moreover, the company has maintained an impressive earning history, having topped the consensus revenue and EPS in three of the trailing four quarters.
For the fiscal year (ending September 2026), the company’s revenue and EPS are anticipated to grow 3.1% and 17.8% year-over-year to $2.70 billion and $6.52, respectively.
High Profitability
GFF’s trailing-12-month EBIT margin of 16.79% is 60.8% higher than the 10.44% industry average. Its trailing-12-month net income margin of 8% is 22.7% higher than the industry average of 6.52%. Likewise, the stock’s trailing-12-month gross profit margin of 40.26% is 27.6% higher than the industry average of 31.55%.
Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 77.72%, 14.13%, and 8.85% are higher than the 13.48%, 7.15%, and 5.28% industry average, respectively.
Lower Valuation
In terms of forward non-GAAP P/E, GFF is currently trading at 14.18x, 32.4% lower than the industry average of 20.98x. The stock’s forward EV/EBITDA and Price/Sales of 10.06x and 1.43x are lower than the industry averages of 12.32x and 1.55x, respectively.
Additionally, the stock’s forward EV/EBIT and Price/Cash Flow of 11.52x and 10.29x are 33.5% and 36.5% lower than the industry averages of 17.32x and 16.20x, respectively.
POWR Ratings Reflect Promise
GFF’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. GFF has a B grade for Value, which is consistent with its lower valuation. The stock has a B grade for Growth, which is in sync with its solid financial performance and historical growth.
Also, the stock has a B grade for Quality, justified by its higher than industry profitability.
GFF has topped among the 42 stocks in the B-rated Industrial – Building Materials industry.
Beyond what I have stated above, we have also given GFF grades for Momentum, Sentiment, and Stability. Get access to all the GFF ratings here.
Bottom Line
GFF reported solid financial results in the last reported quarter. Further, the company’s long-term prospects appear promising, driven by its capacity expansion, strategic acquisitions, and investments.
Moreover, the board of directors of GFF returned a total of $310 million through a quarterly dividend of $0.18 per share and raised share repurchases. This reflects its sound financial standing in the year.
Given GFF’s solid financials, accelerating profitability, and lower valuation, investing in the stock could be suitable.
How Does Griffon Corporation (GFF) Stack Up Against Its Peers?
While GFF has an overall POWR Rating of A, investors could also check out these other stocks within the B-rated Industrial – Building Materials industry with A (Strong Buy) or B (Buy) ratings: Daikin Industries Ltd. ADR (DKILY), Apogee Enterprises, Inc. (APOG), and Cemex, S.A.B. de C.V. Sponsored ADR (CX).
For exploring more A and B-rated industrial stocks, click here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
GFF shares were trading at $78.96 per share on Monday afternoon, up $0.47 (+0.60%). Year-to-date, GFF has gained 30.70%, versus a 29.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
Is Griffon Corporation's Diversified Portfolio a Reason to Buy the Stock? StockNews.com
