Breaking Down Griffon Corporation (GFF) Financial Health: Key Insights for Investors

You're looking at Griffon Corporation's (GFF) latest numbers and seeing a stark contrast: a reported GAAP net income of just $51.1 million for fiscal year 2025, which looks like a major red flag, but the operational metrics tell a much better story. Honestly, the headline GAAP figure is misleading; it's largely due to a massive $217.2 million impairment charge in the Consumer and Professional Products (CPP) segment, which is a non-cash accounting adjustment for a past acquisition. Here's the quick math: the company still pulled in $2.5 billion in revenue and, more importantly, delivered a resilient $522.3 million in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which is a 2% increase, plus they generated a strong $323 million in free cash flow, which is what actually pays the bills and funds growth. They even used that cash to return $174 million to shareholders and improve their leverage ratio (net debt to EBITDA) to a solid 2.4x. That's a defintely healthy balance sheet. The real question is whether the core Home and Building Products segment, with its $1.6 billion in revenue, can continue to offset the softness in the CPP business.

Revenue Analysis

You need a clear picture of where Griffon Corporation (GFF) makes its money, especially after a year of market volatility. The direct takeaway for fiscal year 2025 is that total revenue saw a slight contraction, but the underlying performance of its two core segments tells a story of divergence: one is a bedrock of stability, and the other is navigating a significant demand headwind.

Griffon Corporation reported total revenue of approximately $2.5 billion for the fiscal year ended September 30, 2025, which represents a 4% decrease from the prior year's $2.6 billion. Honestly, that modest dip in the top line is less important than understanding the shift in the mix, particularly in the Consumer and Professional Products segment.

The company's revenue is generated across two primary operating segments: Home and Building Products (HBP) and Consumer and Professional Products (CPP). The HBP segment is the clear revenue leader, contributing roughly 64% of the total revenue, while CPP makes up the remaining 37% of the pie.

Here's the quick math on segment contribution for FY 2025:

The HBP segment, which includes garage doors and access systems, proved to be resilient, with its $1.6 billion in revenue remaining consistent with the prior year. Its primary revenue sources are heavily concentrated in the US, drawing nearly half its sales from residential repair and remodel (49%) and another 42% from commercial applications. This stability shows the strength of the repair and remodel market, which is less sensitive to new housing starts.

The significant change in the revenue stream comes from the CPP segment, which saw a steep 10% decline in revenue to $936 million for the fiscal year. This drop was largely driven by an 8% volume reduction due to reduced consumer demand in North America and the UK, plus some disrupted US customer ordering patterns tied to increased tariffs. What this estimate hides is that while volume was down, the segment's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) actually increased by 18%, a sign that aggressive cost management and sourcing initiatives are starting to pay off, despite the lower revenue.

To be fair, the CPP segment did get a small boost-a 2% benefit-from the acquisition of Pope in Australia in July 2024, which helped offset some of the North American weakness. Still, the segment's revenue remains more diversified geographically, with 45% of its revenue generated outside the United States, including a significant 31% from Australia. The key action for investors is to watch if the operational improvements in CPP can continue to drive profitability even if revenue remains flat, as management projects for fiscal 2026.

If you want to dig deeper into the company's valuation and strategic positioning, you should read the full analysis at Breaking Down Griffon Corporation (GFF) Financial Health: Key Insights for Investors.

Profitability Metrics

You're looking at Griffon Corporation (GFF) because the headline GAAP net income number-just $51.1 million for fiscal year 2025-looks weak compared to the prior year's $209.9 million. Honestly, that's a fair initial reaction, but you need to look past the one-time charges to see the true operational picture. The core business is actually performing quite well, which is why the adjusted figures tell a much better story.

The massive $217.2 million goodwill and intangible asset impairment charge, net of tax, in the Consumer and Professional Products (CPP) segment is what tanked the GAAP Net Profit Margin to just about 2.04% for the full fiscal year 2025. But, if you strip out that non-cash, non-recurring item, the Adjusted Net Income was actually $263.6 million, giving you a much healthier Adjusted Net Profit Margin of roughly 10.54%.

Here's a quick snapshot of the key profitability ratios for fiscal 2025, which ended September 30, 2025:

Operational Efficiency and Margin Trends

The real story here is the underlying operational efficiency and the trend of margin expansion over time, which is defintely what you want to see in a diversified industrial company. Griffon Corporation has been consistently improving its core profitability, evidenced by the operating margin rising by an impressive 9.4 percentage points over the last five years. That's a huge shift in cost management and pricing power.

The Gross Profit Margin is a crucial indicator of pricing and cost of goods sold (COGS) control, and the normalized Gross Margin of 41.7% in the fourth quarter of 2025, which was up 60 basis points, shows strong management. This is where the company makes its money before overhead. The segment performance highlights this strength:

• Home and Building Products (HBP) maintained a stellar EBITDA margin of 31.2% in fiscal 2025.
• Consumer and Professional Products (CPP) saw its adjusted EBITDA increase by 18% to $85.5 million, despite a 10% revenue decline, demonstrating improved cost structure.

The fact that the Home and Building Products segment can hold a margin over 30% in a volatile housing market is a testament to its market position and pricing discipline.

Industry Comparison: GFF Outperforms

To put Griffon Corporation's performance in context, you need to compare it to its peers in the Home and Building Products and Consumer Goods space. The company's margins generally compare very favorably to industry averages, especially when looking at the adjusted numbers.

For example, the industry average Gross Profit Margin for Building Materials is around 30.94%, and the average Net Profit Margin is about 8.00%. Griffon Corporation's normalized Gross Margin of 41.7% and Adjusted Net Margin of 10.54% are significantly higher than these benchmarks, showing superior operational leverage and pricing power in its core segments. The Q3 Operating Margin of 18% is also well above the 13.34% average for the Building Materials industry. This margin premium suggests a competitive advantage, likely from its strong brand portfolio and efficient supply chain.

If you want to dig deeper into the institutional confidence behind these numbers, you should read Exploring Griffon Corporation (GFF) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You need to understand how Griffon Corporation (GFF) funds its operations, and the short answer is that they lean heavily on debt, but they are actively managing that leverage. The company's financial structure is characterized by a high Debt-to-Equity (D/E) ratio, but their focus in fiscal year 2025 was on deleveraging, which is a positive sign for credit quality.

As of the fiscal year-end on September 30, 2025, Griffon Corporation reported total gross debt of approximately $1,424.026 million. This is a substantial figure, but it is important to break down the components of that debt to see the true risk profile.

• Long-term debt, net of current maturities, stood at $1,404.387 million.
• Short-term debt, which includes notes payables and the current portion of long-term debt, was a minimal $8.103 million.

The vast majority of their debt is long-term, which is typical for a capital-intensive business like their Home & Building Products (HBP) segment, giving them more breathing room for repayment. The key takeaway here is that short-term liquidity risk from debt maturities is defintely low.

When you look at the Debt-to-Equity (D/E) ratio, which measures financial leverage (total debt divided by shareholder equity), Griffon Corporation's number is an outlier. The D/E ratio for the quarter ending June 30, 2025, was 25.43. This is dramatically higher than the average for comparable industries, where the Conglomerates average is around 1.01 and Building Products & Equipment is closer to 0.67.

Here's the quick math: A D/E ratio this high is a direct result of the company's relatively low total stockholders' equity, which stood at only $64 million as of June 2025. This signals that the company's assets are overwhelmingly funded by debt, not shareholder capital. You need to be aware of this structural risk, but the market seems to be pricing in the company's ability to service this debt, thanks to strong cash flow.

The company's actions in fiscal 2025 confirm a focus on debt reduction and improving credit health. Griffon Corporation reduced its total debt by $116 million during the year. This action, combined with strong earnings, drove the Net Debt to Adjusted EBITDA leverage ratio down to 2.4x at year-end, a solid improvement from 2.6x in the prior year. This deleveraging effort led S&P Global to upgrade the company's issuer credit rating from 'B+' to 'BB-' in February 2025, reflecting improved credit measures and a stable outlook.

Griffon Corporation balances its financing by using its robust free cash flow (FCF) to manage its debt and reward shareholders. In fiscal 2025, the company generated $323 million in FCF. They used this cash flow not for new debt issuances, but for a balanced capital allocation strategy:

• Reduced debt by $116 million.
• Repurchased $135 million of stock.
• Increased the regular quarterly dividend by 22%.

This shows a clear, actionable strategy: use operating cash flow to pay down debt and return capital to shareholders, rather than relying on equity funding. This is a crucial distinction from a company that issues new stock to fund operations. For a deeper dive into who is buying the stock, check out Exploring Griffon Corporation (GFF) Investor Profile: Who's Buying and Why?

The next step is to monitor their 2026 guidance, where they expect to continue using FCF to support this capital allocation strategy, which should further improve their leverage ratio.

Liquidity and Solvency

You need to know if Griffon Corporation (GFF) can meet its short-term bills and sustain its operations, and the answer, based on the fiscal year 2025 data, is a clear yes. The company's liquidity position is defintely strong, anchored by robust working capital and significant free cash flow generation.

Assessing Griffon Corporation (GFF)'s Liquidity

The most straightforward way to gauge a company's immediate financial health is by looking at its liquidity ratios. For the fiscal year ended September 30, 2025, Griffon Corporation's current ratio stood at a healthy 2.70. This means the company holds $2.70 in current assets (like cash, receivables, and inventory) for every dollar of current liabilities.

The quick ratio (or acid-test ratio), which strips out inventory-often the least liquid current asset-was also very solid at 1.38. A quick ratio above 1.0 is generally a green light, showing that even without selling a single item of inventory, Griffon Corporation has enough liquid assets to cover all its near-term obligations. This is a great sign of operational efficiency and financial discipline.

• Current Ratio: 2.70
• Quick Ratio: 1.38
• Both ratios point to strong short-term coverage.

Working Capital and Cash Flow Trends

The working capital trend for Griffon Corporation is positive. That 2.70 current ratio is actually above the company's ten-year historical average of 2.58, indicating an improvement in its ability to manage short-term assets and liabilities. This strength is directly tied to the company's impressive cash flow generation.

In fiscal 2025, Griffon Corporation generated a substantial $323.0 million in Free Cash Flow (FCF). Free Cash Flow is the cash left over after a company pays for its operating expenses and capital expenditures (CapEx), and it's the lifeblood for everything else: debt reduction, dividends, and share buybacks. Here's the quick math on how that cash was deployed:

The fact that management used the FCF to pay down $116.0 million of debt and execute $134.7 million in share repurchases shows a confident capital allocation strategy. The company is generating more cash than it needs for maintenance, so it's returning capital to shareholders and strengthening the balance sheet.

Liquidity Strengths and Concerns

The primary liquidity strength is the combination of high coverage ratios and robust cash generation. As of September 30, 2025, Griffon Corporation had $99.0 million in cash and equivalents on the balance sheet and substantial untapped liquidity. Specifically, they had $485.7 million available under their revolving credit facility, which acts as a powerful safety net for any unexpected capital needs.

What this estimate hides is the potential impact of a significant goodwill and intangible asset impairment charge of $217.2 million, net of tax, recorded in the Consumer and Professional Products segment during the year. This charge hit net income, but it's a non-cash item, so it did not directly affect the operating cash flow or the liquidity ratios we discussed. Still, it signals a need to watch the performance of that segment closely. You can read more about the company's strategic focus here: Mission Statement, Vision, & Core Values of Griffon Corporation (GFF).

The overall picture is one of excellent liquidity management, allowing the company to navigate market fluctuations while actively reducing debt and buying back stock.

Valuation Analysis

You're looking at Griffon Corporation (GFF) and wondering if the current price makes sense. Honestly, a quick scan of the headline valuation multiples suggests the stock is overvalued right now, but that conclusion is too simple and ignores the company's recent strategic shifts and analyst expectations for its fiscal 2026 earnings.

The core issue is that the trailing Price-to-Earnings (P/E) ratio is extremely high, sitting at about 51.7x as of November 2025. Here's the quick math: that's a massive premium compared to its historical five-year median P/E of around 18.2x. But, this is a classic example of why you must look forward: analysts expect earnings per share (EPS) to jump to around $6.44 for the next fiscal year, which drops the forward P/E to a much more reasonable 10.75x (based on a recent price of $69.23). That's a huge difference, defintely suggesting the market is pricing in significant future growth.

The Price-to-Book (P/B) ratio also looks stretched, coming in at approximately 54.02 for the 2025 fiscal year. To be fair, a high P/B is common when a company has successfully returned capital or is executing a high-margin, asset-light strategy, but this figure is over 368% higher than its five-year average of 10.60. Still, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which accounts for debt, is more balanced at 9.64x for FY 2025. This multiple is right in the 'Fairly Valued' range when compared to its peer group, which is a good sign.

• P/E Ratio (Trailing): 51.7x (Overvalued vs. historical)
• P/E Ratio (Forward): 10.75x (Fairly Valued)
• P/B Ratio (FY 2025): 54.02x (Highly Stretched)
• EV/EBITDA (FY 2025): 9.64x (Fairly Valued)

Stock Price Trajectory and Dividend Health

Over the last 12 months, the stock has been volatile, trading in a 52-week range between a low of $63.92 and a high of $86.73. The current price of around $69.23 is sitting near the lower end of that range, which might present an opportunity if you believe the forward earnings estimates. The all-time high was actually hit back in November 2024 at $84.53, showing the stock has pulled back despite a strong fiscal 2025 performance.

The dividend profile is solid, if not spectacular. Griffon Corporation pays an annualized dividend of $0.88 per share, resulting in a modest dividend yield of about 1.27%. The payout ratio is the key here: the trailing payout ratio is high at 69.72%, but based on the projected next-year EPS of $6.44, the future payout ratio drops to a very comfortable 11.2%. This tells me management has ample room to increase the dividend or, more likely, continue with share buybacks.

Analyst Consensus and Price Target

The Wall Street consensus is a clear Buy rating, based on the seven firms currently covering the stock-a mix of 'Buy' and 'Strong Buy' ratings. This strong conviction is reflected in the average 1-year price target of $98.20. What this estimate hides is the potential for a 40%+ upside from the current price, which is a significant margin of safety. My take? The market is currently valuing Griffon Corporation on its high trailing P/E, but the analysts are focused on the massive projected earnings growth for the next fiscal year.

For a deeper dive into the operational drivers behind these numbers, you should read the full analysis: Breaking Down Griffon Corporation (GFF) Financial Health: Key Insights for Investors. Finance: Model the impact of a P/E multiple of 15x on the $6.44 EPS target by next Friday.

Risk Factors

You're looking at Griffon Corporation (GFF) and need to know what could trip up their financial health. Honestly, the biggest near-term risks boil down to two things: a choppy macroeconomic environment hitting consumer spending and the lingering financial impact of a past acquisition. It's not all doom, but you need to see the numbers behind the headwinds.

Operational and Financial Headwinds

The most concrete risk is the financial hit from an acquisition-related issue in the Consumer and Professional Products (CPP) segment. In the third quarter of fiscal year 2025, Griffon Corporation incurred a significant goodwill and intangible asset impairment charge of $217.2 million, net of tax. That's a massive one-time charge that slashed their fiscal 2025 Net Income to $51.1 million, or $1.09 per share, down sharply from $209.9 million, or $4.23 per share, in the prior year.

Here's the quick math on the segment performance: the CPP segment's full-year 2025 revenue fell by 10% to $0.9 billion, primarily because of a 12% decrease in volume due to weak consumer demand and tariff-related disruption in the U.S. and U.K.. Still, the company's overall financial structure carries a higher level of market risk, indicated by a beta of 1.88.

• Manage debt: Total debt is $1.41 billion as of September 30, 2025.
• Watch the leverage: Net debt to EBITDA is 2.4x, an improvement from 2.6x, but still substantial.
• Acquisition risk: The impairment charge shows the danger of overpaying for growth.

External and Strategic Market Risks

Griffon Corporation is fundamentally tied to the housing and consumer discretionary markets, so external risks are defintely a factor. The Home and Building Products (HBP) segment, while a strong performer, relies heavily on the health of the residential housing market. Any material downturn in new construction or remodeling would directly reduce demand for their garage doors and related products.

Also, trade policy remains a headache. Tariffs continue to disrupt U.S. customer ordering patterns, especially in the CPP segment. Plus, the company has flagged a new technology risk: the integration of Artificial Intelligence (AI) into operations could expose them to new cybersecurity threats, intellectual property risks, and compliance costs as the legal landscape rapidly evolves.

Mitigation and Actionable Insights

The good news is that management isn't sitting on their hands. They are actively mitigating these risks. The CPP segment's adjusted EBITDA actually rose by 18% in 2025, reaching $85.5 million, largely due to their global sourcing strategy and shift to an asset-light business model. This shows they are using operational discipline to offset revenue pressure. On the financial side, they are focused on debt reduction, paying down $116 million of debt in fiscal 2025, which helped improve their leverage ratio. The plan for fiscal 2026 is to continue using operating cash flow for opportunistic share repurchases, debt reduction, and investing in the businesses.

For a deeper dive into the company's full financial picture, including valuation metrics, you should check out the full post on Breaking Down Griffon Corporation (GFF) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking past the current economic headwinds, and honestly, that's the right move for a long-term investor. For Griffon Corporation (GFF), the near-term story is about operational discipline and margin expansion, not top-line explosion, but the groundwork for future growth is defintely there.

The company's strategy is clear: double down on the high-margin Home and Building Products (HBP) segment and fix the profitability of the Consumer and Professional Products (CPP) segment. This focus led to a resilient fiscal year 2025 (FY2025) with adjusted earnings per share (EPS) rising to $5.65 and adjusted EBITDA hitting $522.3 million. That's a strong performance given the challenging environment.

Here's the quick math on where the growth will come from, according to management's fiscal year 2026 (FY2026) guidance:

• Sustained Revenue: Projected at $2.5 billion, consistent with FY2025.
• EBITDA Jump: Adjusted EBITDA is forecast to increase to a range of $580 million to $600 million.
• Margin Improvement: The CPP segment is specifically targeting an EBITDA margin of approximately 10%.

The real opportunity is in the margin expansion, turning stable revenue into significantly higher earnings. Wall Street expects full-year EPS to grow by 10.8% over the next 12 months, reaching around $5.66.

The HBP segment, which includes brands like Clopay, is the largest manufacturer and marketer of garage doors in North America, giving it a dominant market position and channel diversity through big box retailers like Home Depot and Menards, plus over 2,500 dealers. Product innovation, such as the award-winning VertiStack Avante garage door, keeps them ahead of the curve.

For the CPP segment, the growth drivers are less about the U.S. and U.K. market, where demand has been weak, and more about strategic initiatives and geographic expansion. The acquisition of Pope, for example, is driving positive revenue impact in the Australian market, demonstrating a clear path for international growth. Plus, the shift to an asset-light business model across CPP is what's driving the profitability improvements.

Management is also prioritizing capital allocation to drive shareholder value, which is a strong signal of confidence. They increased the regular quarterly dividend by 22% to $0.22 per share and executed $135 million in share repurchases in FY2025. This focus on returning capital, alongside a reduced net debt to EBITDA leverage ratio of 2.4x, shows a balanced approach to growth and financial discipline.

What this estimate hides is the potential for a faster-than-expected recovery in consumer demand, which would provide a tailwind to the CPP segment. Still, the core investment thesis is built on their strong brand portfolio and operational excellence, not a macro recovery.

To dive deeper into the ownership structure and who is betting on this turnaround, you should check out: Exploring Griffon Corporation (GFF) Investor Profile: Who's Buying and Why?