Shares of diversified management and holding company Griffon Corp. (GFF) have declined 11.2% over the last five days amid a slew of major developments. Griffon operates via two segments, Consumer and Professional Products (CPP) and Home and Building Products (HBP).
Griffon expects its $845 million acquisition of Hunter Fan Company to close in the week of January 24. Hunter Fan Company provides residential ceiling, commercial and industrial fans. The transaction is expected to be immediately accretive to Griffon’s cash flow and earnings.
However, Voss Capital, a significant stockholder in Griffon, has opposed this transaction. Voss noted execution risk for this acquisition given the deal size and that Griffon is paying a higher multiple for this acquisition, compared to its own valuation. Yesterday, Ross questioned the circumstances leading to the withdrawal of two of its candidates for the Board of Directors in its proxy fight with Griffon.
Griffon’s upcoming earnings for the first quarter are expected on February 1. Consensus estimates point to earnings per share of $0.12 as compared to the year-ago figure of $0.56.
With these developments in mind, let us take a look at the changes in Griffon’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Griffon’s top risk category is Production, contributing 27% (compared to a sector average of 26%) to the total 33 risks identified. In its recent annual report, the company has changed one key risk factor under the Production risk category.
Griffon noted that CPP and HBP rely on third-party suppliers and manufacturers for sourcing components and the manufacture of certain products. Consequently, the company is exposed to supply chain risks. Its control over the timing of delivery and quality of products may reduce. Any failure to deliver products on time or lower product quality may affect Griffon’s relationships with its customers.
Tracking Insiders
Keeping a tab on insiders stocks can provide timely insights for retail investors. According to TipRanks data on Insider Activity, insiders have bought Griffon shares worth $495.1 thousand in the last three months, indicating a Very Positive insider confidence signal for the stock based on 6 insider transactions in the last 3 months.
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