Baird has increased its price target on shares of Griffon Corp (NYSE: NYSE:GFF) from $84.00 to $92.00, while maintaining an Outperform rating.
The firm's analyst predicts a modest rise in the company's fiscal fourth-quarter results, attributing this to higher EBITDA in the Home & Building Products (HBP) division due to beneficial steel pricing.
The analyst expects Griffon to provide conservative guidance, which is typical for the company, but still considers Griffon a top investment idea.
The optimism is based on the expectation of sustained longer-term HBP margins, recovery and restructuring in the Consumer and Professional Products (CPP) division, and more normalized leverage levels, which are believed to contribute to the company's long-term value.
According to Baird's assessment, Griffon presents a solid value proposition when evaluated based on price-to-earnings (P/E) ratio, free cash flow (FCF), and sum-of-the-parts (SOTP) metrics. These financial metrics are considered indicative of the company's overall financial health and potential for investor returns.
Griffon Corp's stock price adjustment reflects Baird's confidence in the company's future performance and value creation potential.
InvestingPro Insights
Baird's optimistic outlook on Griffon Corp (NYSE:GFF) is further supported by recent InvestingPro data and tips. The company's P/E ratio of 17.45 and adjusted P/E ratio of 15.09 for the last twelve months as of Q3 2024 suggest a relatively modest valuation, especially considering the company's growth prospects. This aligns with Baird's view of Griffon as a solid value proposition.
InvestingPro Tips highlight that Griffon has been aggressively buying back shares and offers a high shareholder yield, which could contribute to the company's attractiveness to investors. Additionally, the company has maintained dividend payments for 14 consecutive years and has raised its dividend for 4 consecutive years, demonstrating a commitment to returning value to shareholders.
The data also reveals that Griffon's revenue for the last twelve months as of Q3 2024 stood at $2,605.23 million, with a gross profit margin of 39.79% and an operating income margin of 15.97%. These figures suggest a robust financial performance, supporting Baird's expectation of sustained margins in the Home & Building Products division.
Investors considering Griffon may be interested to know that InvestingPro offers 13 additional tips for this stock, providing a more comprehensive analysis for those seeking deeper insights into the company's potential.
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