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Griffon Corporation GFF yesterday announced the acquisition of Quatro Design Pty Ltd by its subsidiary, The AMES Companies, Inc. Financial terms of the transaction have not been disclosed.
It is worth noting here that Griffon’s shares gained 4.7% on Jan 5, 2020, ending the trading session at $21.31.
Based in Australia, Quatro Design is engaged in making and distributing glass fiber reinforced concrete landscaping products. It has a wide customer base in the public, residential and commercial sectors.
Inside the Headlines
As noted, Quatro Design will strengthen AMES’ footprints in Australia by expanding its sales channel and product offerings. Notably, AMES has a history of making acquisitions in Australia, having completed five more buyouts in the region since 2013.
In financial terms, Griffon anticipates the buyout of Quatro Design to boost its annual revenues by $5 million as well as prove accretive to earnings in fiscal 2021 (ending September 2021).
AMES comprises Griffon’s Consumer and Professional Products segment. Notably, AMES specializes in making tools and products to be used by professionals and consumers. Key product brands are ClosetMaid, True Temper and AMES. AMES’ products are supplied in Australia, Europe, North America and New Zealand.
In fiscal 2020, Consumer and Professional Products segment’s revenues were $1,139.2 million, representing 47.3% of Griffon’s revenues. On a year-over-year basis, the segment’s revenues increased 13.9%.
Other Inorganic Actions by Griffon
Over time, the company made acquisitions to broaden its product portfolio and enhance its market share. It also resorted to divestments of non-core assets in order to concentrate more on its core operations.
Beside the Quatro Design buyout, the company divested System Engineering Group, Inc. for an undisclosed amount in January 2021. The other party to the transaction was QuantiTech LLC.
In fiscal 2020 (ended September 2020), Griffon’s AMES added Vatre Group Limited to its portfolio. The buyout helped boost the exposure in the U.K. The acquisition boosted the Consumer and Professional Products segment’s revenues by 2% in fiscal 2020.
Zacks Rank, Earnings Estimate and Price Trend
Griffon, with a market capitalization of $1.1 billion, presently carries a Zacks Rank #5 (Strong Sell). The pandemic-related woes and high debt levels are concerning for the company. However, efforts to improve growth opportunities and inorganic activities might aid.
In the past three months, the company’s shares have declined 1.5% against the industry’s growth of 15.5%.
The Zacks Consensus Estimate for its earnings is pegged at 35 cents per share for the first quarter of fiscal 2021 (ended December 2020, results awaited), $1.53 for fiscal 2021 and $1.78 for fiscal 2022 (ending September 2022). Compared with the 30-day-ago figures, estimates represent a decline of 2.8% for the first quarter and growth of 1.3% and 2.9% for fiscal 2021 and fiscal 2022, respectively.
Griffon Corporation Price and Consensus
Griffon Corporation price-consensus-chart | Griffon Corporation Quote
Other companies in the industry, which have made acquisitions or divested non-core businesses in the past four-five quarters, are Danaher Corporation DHR, Honeywell International Inc. HON and 3M Company MMM.
While Danaher currently carries a Zacks Rank #2 (Buy), both Honeywell and 3M carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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