Griffon Corporation (GFF) is a leading provider of consumer and, professional, and home and building products internationally. Its growing operational capacity and strong financial performance have positioned it as a solid investment choice. Further, the company’s iconic brands, diversified product portfolio, and long-term growth trends will contribute to its growth.

Griffon posted strong revenue and net income growth in the last reported quarter, reflecting its solid financial standings. The company also generated $326 million of free cash flow during the year, which supported its repurchase of 4.8 million shares and regular quarterly dividends.

Besides, the building material industry is ever-evolving and growing. The Construction & Building Materials market is projected to grow at a CAGR of 5.4%, resulting in a value of $2.81 trillion by 2030. Trends, including rapid urbanization and industrialization, technological advancements, eco-friendly practices, and urban population growth, are navigating the market’s demand and growth.

GFF stands to capitalize on the impressive industry trends with its extensive portfolio and continuously growing operations. The company recently announced the successful completion of its global sourcing strategy expansion as of September 30, 2024, ahead of the previously announced date of December 31, 2024.

Griffon’s efforts resonate not only in its offerings but also in its stock performance. Shares of GFF have gained 9.1% over the past six months to close its last trading session at $78.33. The stock also delivered an impressive gain of 31.9% over the past year.

Let’s look at factors that could influence GFF’s performance in the upcoming months.

Stable Financials

During the fourth quarter that ended September 30, 2024, GFF’s total revenue increased 2.8% from the year-ago value to $659.67 million. The company’s adjusted gross profit grew 7.8% year-over-year to $271.05 million. Its income from operations of $111.67 million reflects strong growth of 40.6% over the prior year’s quarter.

In addition, the company’s adjusted net income and EPS amounted to $70.94 million and $1.47, indicating increases of 12.5% and 23.5% from the previous year, respectively. The company’s adjusted EBITDA was $137.53 million, up 13.4% year-ago value.

Impressive 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.

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, and the consensus EPS estimate of $1.54 for the same period indicates a 24% year-over-year improvement. Moreover, the company has surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

For the fiscal year (ending September 2026), the company’s EPS is anticipated to grow 17.8% year-over-year to $6.52, while its revenue is expected to increase 3.1% year-over-year to $2.70 billion.

High Profitability

GFF’s trailing-12-month net income margin of 8% is 23.4% higher than the 6.48% industry average. Its trailing-12-month EBIT margin of 16.79% is considerably higher than the industry average of 10.34%. Likewise, the stock’s trailing-12-month levered FCF margin of 10.87% is 59.7% higher than the industry average of 6.81%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 77.72%, 14.13%, and 8.85% are higher than the 13.55%, 7.10%, and 5.29% industry averages, respectively.

Low Valuation

In terms of forward non-GAAP P/E, GFF is currently trading at 14.15x, 33.4% lower than the industry average of 21.24x. Likewise, the stock’s forward EV/Sales and Price/Sales of 2.03x and 1.43x are considerably lower than the industry averages of 1.98x and 1.63x, respectively.

Additionally, the stock’s forward EV/EBITDA and Price/Cash Flow of 10.05x and 10.27x are 19.2% and 39.1% lower than the industry averages of 12.44x and 16.85x, respectively.

POWR Ratings Reflect Optimism

GFF’s robust 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 and Quality, consistent with its lower valuation and higher-than-industry profitability.

Also, the stock has a B grade for Momentum. GFF is currently trading above its 50-day and 200-day moving averages of $76.04 and $69.08, respectively, indicating an uptrend.

GFF has topped among the 43 stocks in the Industrial – Building Materials industry.

Beyond what I have stated above, we have also given GFF grades for Growth, Stability, and Sentiment. Get access to all the GFF ratings here.

Bottom Line

GFF is a multinational conglomerate operating through its various subsidiaries. It has established itself well in the building material landscape. Amid the growing demand for its products, thanks to robust government spending on construction, easing interest rates, and a favorable economic outlook, GFF is poised for impressive growth.

Also, a diversified portfolio of products and solutions, strong cash flow, and growing market reach contribute to the company’s ongoing growth in the competitive market. Given strong financials, accelerating profitability, and robust growth outlook, it could be wise to invest in this stock.

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 Industrial – Building Materials industry with A (Strong Buy) or B (Buy) ratings: Daikin Industries Ltd. ADR (DKILY), Monarch Cement Co. (MCEM), and Holcim Ltd. ADR (HCMLY).

For exploring more A and B-rated industrial stocks, click here.

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GFF shares were trading at $77.66 per share on Wednesday afternoon, down $0.67 (-0.86%). Year-to-date, GFF has gained 8.97%, versus a 3.64% 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. More...

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