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Griffon Q4 Earnings: Can NYSE:GFF Hit Its $0.43 EPS Target?

in EARNINGS/INVESTING IDEAS by

Griffon Corporation (NYSE:GFF) is scheduled to report Q4 earnings results on November 12, 2020.

The company is expected to report earnings of $0.43/share on revenue of $612.1 million. The consensus earnings per share (EPS) of $0.43/share is based on a poll of 3 analysts and represents a growth in eps of 7.5% over the same quarter last year, when the company reported earnings of $0.40/share.

The revenue forecast of $612.1 million based on a poll of 3 analysts implies a year-over-year (YoY) growth in revenue of 6.6%. Last year the company reported $574.2 million in revenue for the quarter.

Expected to report EPS growth of 7.5% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $612.07 $574.16 6.6%
EPS $0.43 $0.40 7.5%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Griffon Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $0.13 $0.59 353.8% Beat
Q2, 2020 $0.19 $0.23 23.2% Beat
Q1, 2020 $0.21 $0.36 68.8% Beat
Q4, 2019 $0.33 $0.40 20.0% Beat
Q3, 2019 $0.27 $0.31 14.8% Beat
Q2, 2019 $0.12 $0.15 21.6% Beat
Q1, 2019 $0.08 $0.22 184.3% Beat
Q4, 2018 $0.36 $0.38 5.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 9.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $20.95 $22.87 9.2% Increase
April 28, 2020 $16.45 $17.05 3.6% Increase
January 30, 2020 $21.90 $20.79 −5.1% Decline
November 13, 2019 $21.71 $24.97 15.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.61, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.61 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Griffon Corporation is currently trading at $22.97/share, down −2.7% for the day. The company is trading at approximately 83.4% of its 52-week high of $27.53/share. The company’s stock price is up 0.4% since the last earnings report and up 4.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 64.38 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:GFF Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 26.64 and a forward P/E multiple of 18.88.

Griffon Corporation’s current share price also implies a price-to-book (P/B) multiple of 2.60. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 30, 2020
Stock Price (Current) $22.97
P/E Ratio 26.6x
P/E Ratio (Fwd) 18.9x
PEG Ratio 0.2
Total Debt / Total Capital 49.4%
Levered Free Cash Flow $101.5 million
EV / EBITDA 11.2x

Finbox

Griffon Corporation is a small-cap stock with a market capitalization of $1.325 billion and a total enterprise value of $2.543 billion. The company operates in the Industrials sector and the Building Products industry.

Griffon Corporation, through its subsidiaries, engages in the consumer and professional products, home and building products, and defense electronics businesses in the United States, Canada, Australia, Europe, and internationally. Its Consumer and Professional Products segment manufactures and markets long-handled tools and landscaping products for homeowners and professionals; and 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. The company’s Home & Building Products segment manufactures and markets residential and commercial sectional garage doors through professional dealers and home center retail chains under the Clopay, Ideal, and Holmes brands; and rolling steel door and grille products for commercial, industrial, institutional, and retail use under the CornellCookson brand. Its Defense Electronics segment provides intelligence, surveillance, and communications solutions for defense, aerospace, and commercial customers; and designs, develops, manufactures, and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers. The company was formerly known as Instrument Systems Corporation and changed its name to Griffon Corporation in 1995. Griffon Corporation founded in 1959 and is headquartered in New York, New York.

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