Griffon Beats Estimates but Has a Big Earnings Drop


Griffon (NYS: GFF) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), Griffon met expectations on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved, and GAAP earnings per share expanded.

Margins grew across the board.

Revenue details
Griffon notched revenue of $451.0 million. The two analysts polled by S&P Capital IQ wanted to see a top line of $454.8 million. Sales were 8.8% higher than the prior-year quarter's $414.4 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.07. The two earnings estimates compiled by S&P Capital IQ predicted $0.05 per share on the same basis. GAAP EPS were $0.04 for Q1 compared to -$0.03 per share for the prior-year quarter.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 22.8%, 160 basis points better than the prior-year quarter. Operating margin was 4.4%, 260 basis points better than the prior-year quarter. Net margin was 0.6%, 100 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $510.1 million. On the bottom line, the average EPS estimate is $0.10.

Next year's average estimate for revenue is $1.94 billion. The average EPS estimate is $0.41.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 48 members out of 63 rating the stock outperform, and 15 members rating it underperform. Among 19 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 15 give Griffon a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Griffon is buy, with an average price target of $12.00.

Over the decades, small-cap stocks like Griffon have provided market-beating returns, provided they're value-priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.