Griffon Corporation (GFF) might not be a household name, but this New York-based holding company has built a solid presence across multiple industries. Whether it’s garage doors, shutters, or materials for disposable healthcare products, Griffon has its hands on everything. And right now, one of its strongest growth engines, the Home and Building Products (HBP) segment, is witnessing strong momentum.

With home renovations and repairs still strong, demand for residential products remains high. The U.S. housing market is gradually recovering, helped by lower interest rates and builder incentives, which bodes well for GFF’s long-term prospects. In fact, industry forecasts predict the residential construction market could grow by nearly $243 million from 2025 to 2029 at a CAGR of 4.5%. On top of that, commercial construction is heating up, driven by major projects from Griffon’s customers.

Moreover, it has been actively strengthening its business through strategic acquisitions. In July 2024, the company acquired Pope, an Australia-based residential watering products provider, through its subsidiary, The AMES Companies, Inc. This move not only expands its international footprint but is also expected to contribute $25 million in annual revenue, bolstering earnings in the coming year.

In terms of price performance, the stock has gained 34.3% over the past six months and 15.5% over the past year, closing the last trading session at $79.25.

Now, let us delve deeper into the factors that could shape GFF’s performance in the near future.

Solid Historical Growth

Over the past three years, GFF has demonstrated consistent growth across key financial metrics. Its revenue grew at a CAGR of 4%, while EBITDA rose at a 30.9% CAGR. Moreover, operational income (EBIT) expanded at a CAGR of 36.8%. Additionally, GFF’s net income and EPS grew at respective CAGRs of 51.2% and 56.1% over the same time frame.

Strong Financials

For the fiscal 2025 first quarter that ended December 31, 2024, GFF’s total revenue amounted to $632.37 million, while its gross profit increased 11.7% year-over-year to $264.28 million. Its operating profit grew 33.7% from the prior year’s quarter to $112.09 million.

In addition, the company’s net income came in at $70.85 million, up 67.9% year-over-year, while GFF’s adjusted EPS of $1.39 reflects a 29.9% increase from the same period last year. Also, its adjusted EBITDA rose 12.7% year-ago value to $131.19 million.

As of December 31, 2024, the company’s cash and equivalents amounted to $151.95 million compared to $114.44 million on September 30, 2024.

Discounted Valuation

In terms of forward non-GAAP P/E, GFF is trading at 13.93x, 31.1% lower than the industry average of 20.21x. Similarly, the stock’s forward EV/EBITDA and Price/Sales of 9.88x and 1.44x are 17.9% and 8.6% lower than the industry averages of 12.04x and 1.58x, respectively. Additionally, its forward EV/EBIT multiple of 11.32 is 31.6% below the industry average of 16.55x.

Robust Profitability

GFF’s trailing-12-month gross profit margin of 41.04% is 30% higher than the industry average of 31.58%. Its trailing-12-month EBIT margin stands at 17.48%, 68.9% higher than the industry average of 10.35%.

In addition, the company boasts a trailing-12-month net income margin of 9.13%, which is 40.4% higher than the sector average of 6.51%. Also, the stock’s trailing-12-month levered FCF margin of 12.06% outperforms the industry average of 6.65% by 81.3%.

POWR Ratings Reflect Optimism

GFF’s solid fundamentals are reflected in its POWR Ratings. In our proprietary system, the stock has an overall B rating, which translates to a Buy. 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’s B grade for Momentum is justified by its share price currently trading above its 50-day moving average of $76.57 and 200-day moving average of $69.77.

Moreover, its B grade for Value and Quality is in sync with its lower valuation and robust profitability compared to the industry standards.

GFF is ranked #7 in the 42-stock Industrial - Building Materials industry.

In addition to what I have stated above, we have also given GFF grades for Growth, Stability, and Sentiment. You can access all the GFF ratings here.

Bottom Line

GFF is poised for solid growth in the coming quarters, thanks to the continued strength of its Home and Building Products (HBP) segment. Moreover, the company’s efforts to reward its shareholders handsomely add to its appeal. On February 5, 2025, the board of directors of GFF declared a quarterly dividend of $0.18 per share. The dividend is payable on March 18, 2025, to shareholders of record as of the close of business on February 25, 2025.

Adding to its strong financial footing, GFF kicked off fiscal 2025 with better-than-expected earnings, reinforcing its resilience in a shifting economic landscape. With the construction market on an upswing and home improvement demand rising, Griffon is well-positioned to benefit from these industry tailwinds.

Between its steady financial performance, shareholder-friendly policies, and long-term growth potential, GFF looks like a stock worth keeping on your radar.

How Does Griffon Corporation (GFF) Stack Up Against Its Peers?

While GFF has an overall POWR Rating of B, investors could also check out these other stocks within the Industrial - Building Materials industry with A (Strong Buy) or B (Buy) ratings: The Monarch Cement Company (MCEM), Apogee Enterprises, Inc. (APOG), and PGT Innovations, Inc. (PGTI).

For exploring more A and B-rated Industrial - Building Materials stocks, click here.

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GFF shares were trading at $77.86 per share on Wednesday afternoon, down $1.39 (-1.75%). Year-to-date, GFF has gained 9.25%, versus a 2.88% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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