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Should Value Investors Buy Griffon (GFF) Stock?

Zacks Equity Research
·2 min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Griffon (GFF). GFF is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 13.06, which compares to its industry's average of 24.58. GFF's Forward P/E has been as high as 24.03 and as low as 6.43, with a median of 14.83, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GFF has a P/S ratio of 0.53. This compares to its industry's average P/S of 1.1.

Finally, we should also recognize that GFF has a P/CF ratio of 8.35. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 30.84. Over the past year, GFF's P/CF has been as high as 10.59 and as low as 3.93, with a median of 8.33.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Griffon is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GFF feels like a great value stock at the moment.


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Zacks Investment Research