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INVESTING IDEAS - page 2

Discover and validate investing ideas with valuation models and charts.

Is Danaher Corporation (NYSE:DHR) Overvalued at 53.19x Price To Earnings?

in INVESTING IDEAS by
scientist using microscope

Danaher Corporation (NYSE:DHR) is currently trading at $225.88, at approximately 92.1% of its 52-week high of $248.32. With the stock price up 68.7% in the last year, investors are worried that the company is getting too expensive. So, is Danaher Corporation overvalued? In this article, we’ll discuss Danaher Corporation’s valuation using different valuation models.

Historical Valuation

One of the quickest ways to spot if a company is getting too expensive is to compare the current valuation to its historical one. We can use the price to sales ratio to cut the noise and avoid the volatility of the company’s earnings.

Considering Danaher Corporation’s latest twelve months revenue/share of $28.71 and using the company’s 5-year average price to sales of 4.78x as a benchmark, we have a fair value of $137.33, which is -39.2% lower than the current price.

With no surprise, we can see that Danaher Corporation’s price to sales of 8.0x is much higher than its 5-year average of 4.8x, indicating that the company is probably trading in overbought territory. We can easily visualize trends in the company’s fundamentals using the Finbox chart editor, as depicted below.

Source: Finbox Chart Engine

Absolute Valuation: Danaher Corporation DCF Analysis

Using a company’s historical valuation as a benchmark could lead to misleading results if a change in its fundamentals justifies the current valuation. So it’s always preferable to take into account the latest financial forecast and analyze the company with an absolute valuation model.

So, let’s analyze Danaher Corporation with a 5Y DCF analysis (EBITDA exit method). Using the latest 5Y revenue forecast CAGR of 11.9%, an average EBITDA margin forecast of 30.5%, a discount rate of 8.5%, and a terminal EBITDA multiple of 23.3x, we get a fair value of $237.6.

So, Is Danaher Corporation Overvalued?

Relying only on one or two financial models to determine a company’s fair value is never a good idea. It’s always preferable to use different models before coming to hasty conclusions.

The Finbox Fair Value Estimate is an advanced financial modeling technology that uses eleven different models to estimate the fair value of a stock and lets you get a company’s fair value at your fingertips. All the models are based on the same data utilized by the biggest investment banks and money managers in the world.

According to the estimate, Danaher Corporation’s fair value is $162.95, representing a -29.0% downside from the current price. Below are the fair value estimates for each model.

Source: Finbox Fair Value Estimates

Company’s Profile: Danaher Corporation

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The company operates through three segments; Life Sciences, Diagnostics, and Environmental & Applied Solutions. The Life Sciences segment provides mass spectrometers; cellular analysis, lab automation, and centrifugation instruments; microscopes; and genomics consumables. This segment also offers filtration, separation, and purification technologies to the biopharmaceutical, food and beverage, medical, aerospace, microelectronics, and general industrial sectors. The Diagnostics segment provides chemistry, immunoassay, microbiology, and automation systems, as well as hematology and molecular diagnostics products. This segment offers analytical instruments, reagents, consumables, software, and services for hospitals, physicians’ offices, reference laboratories, and other critical care settings. The Environmental & Applied Solutions segment offers instrumentation, consumables, software, services, and disinfection systems to analyze, treat, and manage ultra-pure, potable, industrial, waste, ground, source, and ocean water in residential, commercial, industrial, and natural resource applications. This segment also provides equipment, software, services, and consumables for various color and appearance management, packaging design and quality management, packaging converting, printing, marking, coding, and traceability applications for consumer, pharmaceutical, and industrial products. The company was formerly known as Diversified Mortgage Investors, Inc. and changed its name to Danaher Corporation in 1984. Danaher Corporation was founded in 1969 and is headquartered in Washington, the District of Columbia.

Q3 Earnings Preview for Stratasys (NasdaqGS:SSYS)

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Stratasys Ltd. (NasdaqGS:SSYS) is scheduled to report Q3 earnings results on November 12, 2020.

The company is expected to report earnings of -$0.07/share on revenue of $120.4 million. The consensus earnings per share (EPS) of -$0.07/share is based on a poll of 8 analysts and represents a decline in eps of −160.1% over the same quarter last year, when the company reported earnings of $0.12/share.

The revenue forecast of $120.4 million based on a poll of 8 analysts implies a year-over-year (YoY) decline in revenue of −23.5%. Last year the company reported $157.5 million in revenue for the quarter.

Expected to report EPS of -$0.07/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $120.43 $157.46 −23.5%
EPS -$0.07 $0.12 −160.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 3 quarters, and met expectations 1 quarter.

What are your expectations from Stratasys Ltd. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.20 -$0.13 −35.0% Missed
Q1, 2020 -$0.05 -$0.19 -249.5% Missed
Q4, 2019 $0.20 $0.18 −11.3% Missed
Q3, 2019 $0.12 $0.12 0% Met
Q2, 2019 $0.15 $0.16 3.2% Beat
Q1, 2019 $0.06 $0.10 65.5% Beat
Q4, 2018 $0.19 $0.21 8.0% Beat
Q3, 2018 $0.05 $0.11 102.2% 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 falling −1.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $15.82 $15.59 −1.5% Decline
May 14, 2020 $16.35 $16.18 −1.0% Decline
February 26, 2020 $18.26 $15.15 −17.0% Decline
November 13, 2019 $20.69 $19.15 −7.4% Decline

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 −2.78, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.78 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Stratasys Ltd. is currently trading at $14.69/share, up 5.1% for the day. The company is trading at approximately 65.2% of its 52-week high of $22.21/share. The company’s stock price is down −5.8% since the last earnings report and up 16.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 56.74 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:SSYS Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −13.47 and a forward P/E multiple of −37.42.

Stratasys Ltd.’s current share price also implies a price-to-book (P/B) multiple of 0.72. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $14.69
P/E Ratio −13.5x
P/E Ratio (Fwd) −37.4x
PEG Ratio 0.0
Total Debt / Total Capital 2.3%
Levered Free Cash Flow -$35.664 million
EV / EBITDA −299.5x

Finbox

Stratasys Ltd. is a small-cap stock with a market capitalization of $770.5 million and a total enterprise value of $476.2 million. The company operates in the Information Technology sector and the Technology Hardware, Storage & Peripherals industry.

Stratasys Ltd. provides 3D printing and additive manufacturing solutions for individuals, businesses, and enterprises. Its 3D printing systems utilize its fused deposition modeling (FDM) and inkjet-based PolyJet technologies to enable the production of prototypes, tools used for production, and manufactured goods directly from 3D CAD files or other 3D content. The company offers entry-level desktop 3D printers to systems for rapid prototyping, and production systems for direct digital manufacturing. It also provides 3D printing consumable materials, including FDM cartridge-based materials, PolyJet cartridge-based materials, non-color digital materials, and color variations. In addition, the company offers GrabCAD Print software that provides job programming, scheduling, monitoring, and analytics across various 3D printing technologies; and GrabCAD Workbench, a cloud-based project data management solution. Further, it operates Thingiverse, an online community for sharing downloadable digital 3D designs; and GrabCAD Community for mechanical engineers, designers, manufacturers, and students to best practices through tutorials, discussion forums, and design/print challenges. Additionally, the company offers customer support, basic warranty, and extended support programs, as well as strategy, operations, and engineering consultancy services; leases or rents 3D printers and 3D production systems; produces prototypes and end-use parts for customers from a customer-provided CAD file; and offers plastic and metal parts for rapid prototyping and production processes, as well as related professional services, carbon-fiber based printers, and elastomeric materials. Its products and services are primarily used in the automotive, aerospace, medical, dental, education, and consumer goods markets. The company sells its products through a network of resellers and independent sales agents worldwide. Stratasys Ltd. was founded in 1989 and is headquartered in Eden Prairie, Minnesota.

Q3 Earnings Preview for HUYA (NYSE:HUYA)

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HUYA Inc. (NYSE:HUYA) is scheduled to report Q3 earnings results before markets open for trading on November 11, 2020.

The company is expected to report earnings of 元1.40/share on revenue of 元2.845 billion. The consensus earnings per share (EPS) of 元1.40/share is based on a poll of 5 analysts and represents a growth in eps of 61.0% over the same quarter last year, when the company reported earnings of 元0.87/share.

The revenue forecast of 元2.845 billion based on a poll of 8 analysts implies a year-over-year (YoY) growth in revenue of 25.6%. Last year the company reported 元2.265 billion in revenue for the quarter.

Expected to report EPS growth of 61.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue 元2,845.04 元2,265.09 25.6%
EPS 元1.40 元0.87 61.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from HUYA Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 元1.20 元1.49 24.4% Beat
Q1, 2020 元1.04 元1.12 7.9% Beat
Q4, 2019 元0.95 元1.02 7.2% Beat
Q3, 2019 元0.74 元0.87 17.0% Beat
Q2, 2019 元0.56 元0.73 31.4% Beat
Q1, 2019 元0.61 元0.59 −3.3% Missed
Q4, 2018 元0.54 元0.76 41.6% Beat
Q3, 2018 元0.30 元0.55 85.3% 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 7.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 11, 2020 $24.04 $25.73 7.0% Increase
May 20, 2020 $18.75 $17.09 −8.9% Decline
March 16, 2020 $15.40 $14.85 −3.6% Decline
November 12, 2019 $25.35 $24.18 −4.6% Decline

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 −2.07, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.07 implies a 1.9% chance of earnings manipulation.

Fundamentals And Technical Analysis

HUYA Inc. is currently trading at $21/share, down −4.5% for the day. The company is trading at approximately 69.0% of its 52-week high of $30.62/share. The company’s stock price is down −18.4% since the last earnings report and down −4.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 44.10 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HUYA Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 45.29 and a forward P/E multiple of 26.39.

HUYA Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.27. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $21
P/E Ratio 45.3x
P/E Ratio (Fwd) 26.4x
PEG Ratio 0.6
Total Debt / Total Capital 0.3%
Levered Free Cash Flow 3.1x
EV / EBITDA 35.5x

Finbox

HUYA Inc. is a mid-cap stock with a market capitalization of $4.893 billion and a total enterprise value of $3.385 billion. The company operates in the Communication Services sector and the Entertainment industry.

HUYA Inc., through its subsidiaries, operates game live streaming platforms in the People’s Republic of China. Its platforms enable broadcasters and viewers to interact during live streaming. Its live streaming content covers a library of games, including mobile, PC, and console games; and other entertainment genres, such as talent shows, anime, outdoor activities, live chats, online theatre, and other genres. The company operates Nimo TV, a game live streaming platform primarily in Southeast Asia and Latin America. It also provides online advertising and marketing services. In addition, the company provides software development and Internet value added services. As of December 31, 2019, its live streaming content covered approximately 3,800 games. The company was founded in 2014 and is headquartered in Guangzhou, the People’s Republic of China. HUYA Inc. is a subsidiary of Tencent Holdings Limited.

Cornerstone Building Brands Q3 Earnings: Is NYSE:CNR Expensive at 338.1x Forward P/E?

in EARNINGS/INVESTING IDEAS by
red toy house placed on table with pile of coins

Cornerstone Building Brands, Inc. (NYSE:CNR) is scheduled to report Q3 earnings results after markets close for trading on November 10, 2020.

The company is expected to report earnings of $0.30/share on revenue of $1.201 billion. The consensus earnings per share (EPS) of $0.30/share is based on a poll of 4 analysts and represents a growth in eps of 0.8% over the same quarter last year, when the company reported earnings of $0.30/share.

The revenue forecast of $1.201 billion based on a poll of 3 analysts implies a year-over-year (YoY) decline in revenue of −6.6%. Last year the company reported $1.285 billion in revenue for the quarter.

Expected to report EPS growth of 0.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,200.53 $1,285.04 −6.6%
EPS $0.30 $0.30 0.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Cornerstone Building Brands, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.10 $0.34 448.7% Beat
Q1, 2020 -$0.27 -$1.20 -352.8% Missed
Q4, 2019 $0.06 $0.11 70.0% Beat
Q3, 2019 $0.26 $0.30 13.9% Beat
Q2, 2019 $0.28 $0.26 −8.7% Missed
Q1, 2019 -$0.07 -$0.28 -285.7% Missed
Q4, 2018 $0.53 $0.55 3.4% Beat
Q3, 2018 $0.48 $0.51 7.3% 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 July 4, 2020, the stock price reacted by increasing 18.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 11, 2020 $7.24 $8.57 18.4% Increase
May 12, 2020 $4.77 $3.97 −16.8% Decline
March 3, 2020 $7.49 $8.13 8.5% Increase
November 6, 2019 $6.87 $6.35 −7.6% Decline

Fundamentals And Technical Analysis

Cornerstone Building Brands, Inc. is currently trading at $8.24/share, up 2.0% for the day. The company is trading at approximately 80.2% of its 52-week high of $10.20/share. The company’s stock price is down −3.9% since the last earnings report and up 1.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 49.25 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CNR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −2.11 and a forward P/E multiple of 338.06.

Cornerstone Building Brands, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.72. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 4, 2020
Stock Price (Current) $8.24
P/E Ratio −2.1x
P/E Ratio (Fwd) 338.1x
Price To Sales 0.2x
Total Debt / Total Capital 79.8%
Levered Free Cash Flow $215 million
EV / EBITDA 7.8x

Finbox

Cornerstone Building Brands, Inc. is a small-cap stock with a market capitalization of $1.011 billion and a total enterprise value of $4.514 billion. The company operates in the Industrials sector and the Building Products industry.

Cornerstone Building Brands, Inc., together with its subsidiaries, designs, engineers, manufactures, and markets external building products for the commercial, residential, and repair and remodel construction markets in North America. The company operates through three segments: Commercial, Siding, and Windows. The Commercial segment manufactures and distributes various metal products for the nonresidential construction markets under various brand names through a network of plants and distribution centers. It also provides metal coil coating services for commercial and construction applications. The Siding segment offers vinyl siding and skirting products, steel siding products, vinyl and aluminum soffit products, aluminum trim coils, aluminum gutter coils, aluminum gutters, aluminum and steel roofing accessories, cellular PVC trims and moldings, J-channels, wide crown moldings, window and door trims, F-channels, H-molds, fascia, undersill trims, outside/inside corner posts, rain removal systems, and injection molded designer accents, such as shakes; shingles; scallops; shutters; vents and mounts; vinyl fence; vinyl railing; and stone veneer. The Windows segment provides vinyl, aluminum-clad vinyl, aluminum, wood, and clad-wood windows and patio doors; and steel, wood, and fiberglass entry doors. The company was formerly known as NCI Building Systems, Inc. and changed its name to Cornerstone Building Brands, Inc. in May 2019. Cornerstone Building Brands, Inc. was founded in 1984 and is headquartered in Cary, North Carolina.

Sally Beauty Q4 Earnings: Is NYSE:SBH Cheap at 7.9x Forward P/E?

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Sally Beauty Holdings, Inc. (NYSE:SBH) is scheduled to report Q4 earnings results before markets open for trading on November 12, 2020.

The company is expected to report earnings of $0.56/share on revenue of $985.8 million. The consensus earnings per share (EPS) of $0.56/share is based on a poll of 9 analysts and represents a decline in eps of −3.6% over the same quarter last year, when the company reported earnings of $0.58/share.

The revenue forecast of $985.8 million based on a poll of 8 analysts implies a year-over-year (YoY) growth in revenue of 2.1%. Last year the company reported $965.9 million in revenue for the quarter.

Expected to report EPS contraction of −3.6% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $985.85 $965.94 2.1%
EPS $0.56 $0.58 −3.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Sally Beauty Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 -$0.01 -$0.11 -877.8% Missed
Q2, 2020 $0.22 $0.23 4.0% Beat
Q1, 2020 $0.56 $0.47 −16.4% Missed
Q4, 2019 $0.53 $0.58 9.2% Beat
Q3, 2019 $0.58 $0.60 4.2% Beat
Q2, 2019 $0.54 $0.51 −5.4% Missed
Q1, 2019 $0.53 $0.57 7.7% Beat
Q4, 2018 $0.48 $0.51 6.9% 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 falling −12.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $13.32 $11.61 −12.8% Decline
May 6, 2020 $9.66 $9.92 2.7% Increase
February 6, 2020 $15.98 $13.20 −17.4% Decline
November 7, 2019 $16.64 $19.90 19.6% 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 −2.98, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.98 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Sally Beauty Holdings, Inc. is currently trading at $10.30/share, up 10.8% for the day. The company is trading at approximately 49.2% of its 52-week high of $20.73/share. The company’s stock price is down −11.3% since the last earnings report and up 16.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 54.01 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:SBH Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 10.21 and a forward P/E multiple of 7.91.

Sally Beauty Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of −16.55. 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) $10.30
P/E Ratio 10.2x
P/E Ratio (Fwd) 7.9x
PEG Ratio −0.2
Total Debt / Total Capital 72.6%
Levered Free Cash Flow $260.2 million
EV / EBITDA 8.2x

Finbox

Sally Beauty Holdings, Inc. is a small-cap stock with a market capitalization of $1.044 billion and a total enterprise value of $2.977 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care, skin and nail care, styling tools, and other beauty products for retail customers and salon professionals. This segment also provides products under third-party brands, such as Wella, Clairol, OPI, Conair, and Hot Shot Tools, as well as exclusive-label brand merchandise. The Beauty Systems Group segment offers professional beauty products, such as hair color and care, skin and nail care, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce Websites, and sales force, as well as through franchised stores under the Armstrong McCall store names. This segment also sells products under third-party brands, such as Paul Mitchell, Wella, Matrix, Schwarzkopf, Kenra, Goldwell, Joico, and Chi. As of November 18, 2019, the company operated 5,061 stores, including 159 franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. It also distributes its products through full-service/exclusive distributors, open-line distributors, direct sales, and mega-salon stores. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.

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

in EARNINGS/INVESTING IDEAS by
red toy house placed on table with pile of coins

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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