This consumer products company walloped Wall Street’s earnings estimates, posting EPS of $.059, compared to the $0.23 forecast. Analysts expect the company to grow at an annual rate of 20.41% over the next five years.
Griffon Corporation (GFF)
From Upside
Griffon Corporation is built around three attractive and growing businesses. The consumer products business (46% of trailing 12-month revenue), which traces its roots back to 1774, sells
storage and landscaping products. The home products division (39%) is the largest U.S. maker of residential and commercial garage doors. The defense electronic unit (15%) is a leading provider of surveillance and communications gear used in military and aerospace applications.
Griffon’s strong operating momentum reflects robust demand for home-improvement products spurred by the pandemic. A favorable product mix, improved profit margins, and acquisitions have boosted earnings and cash flow growth.
For fiscal 2020 ending September, the three-analyst consensus calls for per-share earnings of $1.54, up 43%. For fiscal 2021, per-share profits are expected to advance 3%—a conservative target based on recent operating momentum. Over the next five years, the consensus calls for per-share profits to grow 20% annually. While that figure seems optimistic, the company appears
capable of delivering 7% to 12% annual profit growth.
The stock trades at less than 14 times expected 2021 per-share earnings. Griffon, which earns an 83 for Quadrix® Value and 99 in Overall, is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, upsidestocks.com, 800-233-5922, September 7, 2020