Investment Thesis
Griffon faces severe operational deterioration with revenue declining 3.9% YoY and net income collapsing 75.6%, while burdened by an unsustainable leverage ratio of 14.77x debt/equity. Although positive free cash flow and strong liquidity provide near-term stability, the company's constrained financial flexibility and declining profitability trajectory present material downside risk.
Strengths
- Strong gross margin of 45.7% demonstrates underlying pricing power and core business efficiency
- Positive free cash flow of $72.5M with healthy operating cash flow of $90.1M provides operational liquidity
- Robust short-term liquidity with current ratio of 2.86x and $109.7M cash buffer
Risks
- Extreme leverage with debt/equity ratio of 14.77x ($1.4B long-term debt vs $94.4M equity) severely constrains financial flexibility
- Revenue contracting 3.9% YoY with net income plummeting 75.6% indicates significant operational or structural deterioration
- Interest coverage of 4.3x provides limited cushion; if business conditions worsen further, debt servicing capability becomes questionable
Key Metrics to Watch
- Revenue stabilization and YoY growth trajectory
- Net margin recovery and explanation of 75.6% earnings decline
- Debt reduction progress and deleveraging path toward sustainable leverage ratios
Financial Metrics
Revenue
876.1M
Net Income
83.7M
EPS (Diluted)
$1.83
Free Cash Flow
72.5M
Total Assets
2.1B
Cash
109.7M
Profitability Ratios
Gross Margin
45.7%
Operating Margin
21.3%
Net Margin
9.6%
ROE
88.6%
ROA
4.1%
FCF Margin
8.3%
Balance Sheet & Liquidity
Current Ratio
2.86x
Quick Ratio
2.43x
Debt/Equity
14.77x
Debt/Assets
95.4%
Interest Coverage
4.33x
Long-term Debt
1.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T10:48:32.535185 |
Data as of: 2026-03-31 |
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