Value
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 0.5 |
| P/S | 9.2 |
| EV/EBITDA | 5.3 |
| Fwd P/E | 7.7 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 15.9x
- ▸PEG: 0.03
- ▸Attractively valued
GFF · Why this verdict
Why Griffon (GFF) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Griffon delivers consistent earnings beats and exceptional free cash flow conversion but carries significant leverage, declining revenue, and a risk/reward that does not clear the asymmetry bar at current levels near the 52-week high.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With a debt-to-equity ratio of 15.6, leverage is a meaningful penalty on the investment case; at a rich multiple a highly indebted balance sheet leaves little cushion if revenue or margins soften. Bear case | Debt-to-equity falls below 10 times within 12 months, reflecting meaningful debt paydown funded by free cash flow. | ↑Improving |
| CounterExceptional cash conversion mitigates the leverage concern if the company systematically deploys free cash flow toward debt reduction — the leverage penalty fades when the denominator grows. | ||
Revenue fell approximately 1% on a trailing basis and the company carries no identifiable competitive moat, limiting pricing power and making it difficult to sustain margins if volume headwinds persist. Growth breakdown | Revenue growth turns positive on a year-over-year basis for 2 consecutive quarters, signalling an inflection from the current declining trajectory. | →Stable |
| CounterEven without a moat, a company with a strong Piotroski score of 7 out of 9 and exceptional cash conversion can sustain profitability through a revenue trough; a modest volume recovery could disproportionately lift margins. | ||
The company has beaten or met earnings estimates across all four of the last four quarters — three outright beats followed by an in-line quarter at the oldest period — signalling steady execution against analyst forecasts. Earnings | The company delivers positive earnings surprises in at least 3 of the next 4 quarters, sustaining the beat-or-meet streak. | →Stable |
| CounterAverage earnings surprises have been modest, and with RSI near 69 and the stock close to its 52-week high, any stumble against a freshly raised consensus bar could trigger a disproportionate price reaction. | ||
Free cash flow runs at approximately 798% of reported net income, reflecting a business that converts accounting earnings into cash at an exceptional rate and generating meaningful flexibility for debt reduction or capital return. Quality breakdown | Free cash flow conversion remains above 200% of net income over the next 12 months, confirming the sustainability of this quality advantage. | →Stable |
| CounterA free cash flow conversion dramatically above net income can reflect non-recurring working capital releases or timing differences rather than structural cash generation; if the gap closes toward parity, the apparent quality advantage normalises. | ||
With a debt-to-equity ratio of 15.6, leverage is a meaningful penalty on the investment case; at a rich multiple a highly indebted balance sheet leaves little cushion if revenue or margins soften.
↑ImprovingBear case
- Expectation
- Debt-to-equity falls below 10 times within 12 months, reflecting meaningful debt paydown funded by free cash flow.
CounterExceptional cash conversion mitigates the leverage concern if the company systematically deploys free cash flow toward debt reduction — the leverage penalty fades when the denominator grows.
Revenue fell approximately 1% on a trailing basis and the company carries no identifiable competitive moat, limiting pricing power and making it difficult to sustain margins if volume headwinds persist.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive on a year-over-year basis for 2 consecutive quarters, signalling an inflection from the current declining trajectory.
CounterEven without a moat, a company with a strong Piotroski score of 7 out of 9 and exceptional cash conversion can sustain profitability through a revenue trough; a modest volume recovery could disproportionately lift margins.
The company has beaten or met earnings estimates across all four of the last four quarters — three outright beats followed by an in-line quarter at the oldest period — signalling steady execution against analyst forecasts.
→StableEarnings
- Expectation
- The company delivers positive earnings surprises in at least 3 of the next 4 quarters, sustaining the beat-or-meet streak.
CounterAverage earnings surprises have been modest, and with RSI near 69 and the stock close to its 52-week high, any stumble against a freshly raised consensus bar could trigger a disproportionate price reaction.
Free cash flow runs at approximately 798% of reported net income, reflecting a business that converts accounting earnings into cash at an exceptional rate and generating meaningful flexibility for debt reduction or capital return.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income over the next 12 months, confirming the sustainability of this quality advantage.
CounterA free cash flow conversion dramatically above net income can reflect non-recurring working capital releases or timing differences rather than structural cash generation; if the gap closes toward parity, the apparent quality advantage normalises.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.6 |
| ROA | 8.3 |
| Gross margin | 4.3 |
| Op margin | 8.1 |
| Net margin | 0.1 |
| Current ratio | 9.6 |
| FCF quality | 10.0 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 29%
- ▸Excellent cash conversion: 798% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
2.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.2 |
- ▸Declining revenue: -1%
Momentum
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Uptrend pullback (RSI 34) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.7 |
| Price target | 8.8 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (7.0) — signal dampened
- ▸Analyst upside: 33%
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $13,601,027 (0.324% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 4.7 |
| growth rank | 2.3 |
Technical
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.2 |
| support resistance | 8.9 |
| 52w position | 8.2 |
Risk (lower is worse)
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 7.2 |
| volatility | 4.3 |
| beta | 5.6 |
| debt equity | 0.0 |
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.6 |
| dividend safety | 3.8 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:2.3>=1.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:15d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:4.4<4.5
Warning (1)
- INSIDER:0.32%=MODERATE
Reward-to-Risk
2.34
Upside
+15.4%
Downside
6.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 15d with 3/4 beat streak
SuitabilityAggressive — Beta 1.36>1.3, MCap $4.2B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 8.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.4<4.5) reinforce the read. Current asymmetry R:R is 2.34 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 8.4, Sentiment at 7.3, and Value at 7.0; the weakest are Growth at 2.2, Peer rank at 2.6, and Momentum at 4.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 2.34 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Consistency Steady Beats
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Exceptional Free Cash Flow Conversion
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive quarters.
- P3High Leverage Limits Margin Of Safety
Trip ifDebt-to-equity ratio rises above 18 times, indicating leverage is expanding rather than contracting.
- P4Revenue Decline No Moat
Trip ifRevenue growth exceeds 5% year-over-year for 2 consecutive quarters, falsifying the declining revenue concern.