Griffon (GFF) Stock Forecast & Price Target

Griffon Corporation has demonstrated significant financial improvement, with segment EBITDA margins expanding from approximately 17% in FY21 to around 30% in FY23, indicating robust operational efficiency and cost management. The Consumer and Professional Products segment has seen margins rise to 8.8% as of the third quarter of FY24, driven by an optimized manufacturing footprint, a reduction in headcount, and the sale of lower-cost outsourced products. Additionally, the Home and Building Products segment has maintained over 30% EBITDA margins for the past two years, benefiting from steady pricing and strategic synergies from acquired businesses, suggesting a strong potential for margin sustainability and growth moving forward.

Griffon Corp's recent performance has been negatively impacted by a significant decline in sales, with last twelve months (LTM) sales decreasing by 23% from fiscal year 2022, alongside segment EBITDA margins dropping from approximately 9% to 4.6% in fiscal year 2023. The company is facing headwinds from overstocked channel inventories post-COVID and is further challenged by a rising interest rate environment that affects home renovation and repair financing, impacting customer spending behavior. Additionally, reliance on sourcing products from international locations, especially China, contributes to cost pressures amid ongoing trade disputes, further complicating the company's financial outlook.