GRIFFON CORPORATION (GFF): what the price requires

At today's price, GRIFFON CORPORATION (GFF) is priced for today's economics sustained for ~8.3 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/GFF

Headline

FieldValue
TickerGFF
CompanyGRIFFON CORPORATION
Current price$89.55/sh
CompositionHBP - Residential repair and remodel 31% / HBP - Commercial 27% / HBP - Residential new construction 5% / CPP - Residential repair and remodel 11% / CPP - Retail 7% / CPP - Residential new construction 2% / CPP - Industrial 3% / CPP - International excluding North America 14%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed11.1%
Operating margin today7.8%
Margin expansion implied+3.3pp
Must persist for8.3y
Multiple paid33x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.33σ
cohort percentile (of 225 peers)74
sustained it ~8.3 years at this level18%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings4.87x1expensive
Relative2.94x3expensive
Growth1.96x1expensive

Families that call it expensive: Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.1%); the inversion above states its own rate.

Per-Model Detail (n=5)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$28.473.15xyesP/E 39.6x (blended: static sector reference 18x + trailing (TTM) 568x), scenarios: 33.7x / 39.6x / 45.5x (bear / base = reference held flat / bull), EV/EBITDA 15.52x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$1.7052.68xyesBV/sh $2.07, ROE (TTM) 7.6%, ke 9.3% (excluded from median)
Two-Stage Excess ReturnAsset$1.5458.15xyes5yr excess ROE then converge to ke=9.3% (excluded from median)
Discounted Future Market CapGrowth$45.681.96xyesRev $2.3B, growth -8% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.7x / 2.0x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$18.404.87xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.21B × (1−28%) / WACC 7.1% → EPV (no growth)
Residual IncomeAsset$1.5258.91xyesBV $2.07 + 5yr PV of (ROE (TTM) 7.6% − Kₑ 9.3%) × BV; BV grows 5.0%/yr (excluded from median)
Graham NumberAsset$3.2027.98xyes√(22.5 × EPS $0.22 × BVPS $2.07) — Graham's conservative floor (excluded from median)
EV/EBITDA RelativeRelative$30.512.94xyesEBITDA $0.23B × sector EV/EBITDA 12.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$0.18497.50xyesEPS $0.22 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$1.2671.07xyesBV $2.07 × (ROIC 4.3% / WACC 7.1%) (excluded from median)
P/Sales SectorRelative$128.410.70xyesRevenue $2.35B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$2.3837.63xyesEPS $0.22 / required return 9.3% (Rf 4.3% + ERP 5.0%) (excluded from median)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.3b
Net debt / NOPAT (after-tax)11.21x
Net debt / operating income (pre-tax)8.10x
Interest coverage1.8x
Share count CAGR (buyback)-3.8%
Burning cashno

Bullet Takeaways

Bull Case

Building-products companies are hard to value because their reported earnings move with the housing cycle, not with the franchise. A soft year of residential demand drags trailing operating profit down and makes the multiple look stretched, while a strong year flatters it, so the static lenses tend to misread where in the cycle a name sits. Griffon breaks the usual pattern in a useful way: its largest business, the Clopay garage-door franchise inside Home and Building Products, is the North American leader in a product that gets replaced on damage and remodel cycles as much as on new construction, which gives it a steadier repair-and-remodel base than a pure new-build supplier. That is the sector lens that reframes the price. The market is paying a premium not for cyclical earnings but for a durable, share-leading position the trailing numbers in a soft quarter understate.

The mechanic that turns that position into per-share value is capital allocation rather than top-line growth. Revenue fell about 1% in fiscal second-quarter 2026 to roughly $422 million as volume dropped on weak residential demand, yet the company held its full-year outlook of $1.8 billion in continuing revenue and $458 million of adjusted EBITDA, evidence the margin structure holds even when volumes dip. First-half free cash flow from continuing operations of $100.7 million comfortably covered the $72 million returned through dividends and buybacks. Management has been explicit that M&A is not a priority and that cash goes to buybacks, deleveraging, and the dividend. A share count shrinking near 3.8% a year is direct evidence the deployment is real, not just authorized.

The portfolio is being simplified to sharpen exactly that economics. Griffon is reshaping into a pure-play North American building-products company: it expects to close the AMES North America joint venture with ONCAP by the end of June 2026, taking roughly $100 million of cash plus $161 million of second-lien pay-in-kind notes and retaining a 43% stake, while it exits the U.K. business and runs a strategic process for AMES Australia. What that leaves behind is a cleaner, higher-margin company centered on Clopay, with proceeds management can point at the 2028 notes or at more buybacks. The bull case is not that Griffon grows fast; it is that a durable franchise plus disciplined capital return compounds per-share value through a cycle the reported numbers make look worse than the business is.

Bear Case

The advantage being chipped away is the one the price most depends on: pricing power in the core door business. For several quarters Griffon has offset falling volume with favorable price and mix, and in fiscal second-quarter 2026 that arithmetic held, a 6% drop in volume against a 5% favorable price-and-mix contribution, leaving revenue down only about 1%. That is a respectable result, but it shows the dependence. When the demand softness is in residential markets, the largest end market for Home and Building Products, price is doing the work that volume used to, and price increases get harder to push the longer demand stays weak. A garage door is a leading product, but it is still a commodity-adjacent durable competing with other manufacturers; the moat is distribution and brand, not a patent, and the data already shows volume erosion that pricing is papering over rather than reversing.

The leverage is what turns a demanding price into a genuinely risky one. Net debt sits near $1.3 billion, roughly 6.3 times trailing operating profit, and interest coverage is thin at about 2.3 times. That is a balance sheet built for a steadier demand environment than the one the residential end markets are delivering, and it leaves little slack if the volume declines deepen or the price offset finally gives way. The portfolio reshaping helps, but the cash it generates, around $100 million from the AMES joint venture plus pay-in-kind notes, is modest against the debt load, and the 2028 senior notes are the real clock on the leverage story.

What the price requires makes the whole thing fragile. At roughly 27 times trailing operating income the market is embedding company-wide operating growth near 22.8% a year for five years against a trailing operating margin around 8%. Some of that is the normalization of a soft year rather than pure expansion, but even crediting that, the assumption sits at the demanding end, and only about a third of comparable fast-growers have sustained a pace like that over five years. The valuation methods say the same thing from the other direction: the earnings-power lens reads the price at more than four times its central estimate and the peer-multiple lens at well over two times, while only the forward-growth method reaches the price. When three of four families call it richly valued and only continued compounding closes the gap, the buyback can lift per-share figures but it cannot manufacture 22.8% operating growth. If that growth does not materialize, the conservative methods are the more honest read, and a leveraged balance sheet gives the disappointment teeth.

Valuation

What the price is betting is aggressive against the business as it stands. Inverted, today's price near 27 times trailing operating income implies company-wide operating growth of roughly 22.8% a year over five years, set against a trailing operating margin near 8%. One caveat matters: trailing operating profit is depressed by a soft residential year, so part of that implied growth is the normalization of a weak base rather than pure expansion. Even allowing for that, the assumption sits at the demanding end, and only about a third of comparable fast-growers have sustained a pace like this across five years.

The disagreement among the methods all points one way. The asset family does not score here; the earnings-power lens, which capitalizes normalized trailing operating profit with no growth, reads the price at more than four times its central estimate, and the peer-multiple lens above two times, while only the forward-growth method, which credits future compounding, reaches the price. That is the durability-premium pattern: the static frames that value the business as it stands cannot price a level that assumes years of above-trend growth, so they read expensive and the growth lens alone reaches it. The honest interpretation is that the premium is a bet on the cleaner, Clopay-centered company the divestitures leave behind growing into the price, not a level the current earnings power supports.

Solvency is the part that converts an optimistic price into a risky one. This is a corporate balance sheet, not a financial's, and the relevant frame is leverage and coverage: net debt near $1.3 billion is roughly 6.3 times trailing operating profit and interest coverage runs about 2.3 times, with senior notes maturing in 2028. The share count falling near 3.8% a year is the offsetting force, retiring stock and lifting per-share figures, but it operates alongside the debt rather than instead of it. A buyer at this price is underwriting both the growth the static methods cannot frame and a balance sheet that needs the demand environment to cooperate.

Catalysts

The fiscal second-quarter 2026 print on May 6 framed the near term as a soft-demand quarter managed through pricing. Revenue of about $422 million fell roughly 1% as volume dropped on weak residential markets, offset by favorable price and mix, and adjusted EBITDA came in near $98 million. The company reaffirmed its fiscal 2026 outlook of $1.8 billion in continuing revenue and $458 million of adjusted EBITDA, signaling that the margin structure is holding even as volumes dip.

The structural catalyst is the portfolio transformation announced February 5. Griffon is reshaping into a pure-play North American building-products company: it expects to close the AMES North America joint venture with ONCAP by the end of June 2026, receiving about $100 million of cash and $161 million of second-lien pay-in-kind notes while retaining a 43% stake and board representation; it is exiting the AMES United Kingdom business and running a strategic review of AMES Australia. The close of the joint venture is the event to watch, both for the proceeds and for the cleaner, higher-margin Clopay-centered company it leaves behind. How management splits those proceeds between paying down debt ahead of the 2028 notes and further buybacks is the second thing to watch.

Sentiment leans constructive. Baird raised its target to $115 from $108 with an outperform rating, and the broader analyst consensus clusters well above today's price. That street optimism credits the post-divestiture company more generously than the static valuation methods do, which is the gap the next several prints will resolve: whether the simplified Griffon grows into the premium the price already pays.

Peer Cohorts (Per Segment, With Filing Citations)

Home and Building Products (reported)

Consumer and Professional Products (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Griffon Q2 FY2026 earnings call, May 2026 · Griffon Q2 FY2026 10-Q, May 2026 · Griffon Q2 FY2026 earnings release, May 6, 2026 · MarketBeat analyst ratings, June 2026

View the full interactive GFF report on boothcheck