Results: Griffon Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Griffon Corporation (NYSE:GFF) just released its latest second-quarter results and things are looking bullish. The company beat forecasts, with revenue of US$673m, some 7.6% above estimates, and statutory earnings per share (EPS) coming in at US$1.28, 67% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Griffon

Following last week's earnings report, Griffon's five analysts are forecasting 2024 revenues to be US$2.66b, approximately in line with the last 12 months. Per-share earnings are expected to grow 12% to US$4.48. In the lead-up to this report, the analysts had been modelling revenues of US$2.62b and earnings per share (EPS) of US$4.06 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice gain to earnings per share expectations following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.3% to US$87.40. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Griffon at US$95.00 per share, while the most bearish prices it at US$80.00. This is a very narrow spread of estimates, implying either that Griffon is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Griffon's revenue growth is expected to slow, with the forecast 1.4% annualised growth rate until the end of 2024 being well below the historical 7.0% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Griffon is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Griffon following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Griffon analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Griffon that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.