Financial Review: Griffon (NYSE:GFF) and AZZ (NYSE:AZZ)

AZZ (NYSE:AZZ) and Griffon (NYSE:GFF) are both mid-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.

Dividends

AZZ pays an annual dividend of $0.96 per share and has a dividend yield of 0.7%. Griffon pays an annual dividend of $0.88 per share and has a dividend yield of 0.9%. AZZ pays out 17.3% of its earnings in the form of a dividend. Griffon pays out 22.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Griffon has raised its dividend for 1 consecutive years. Griffon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares AZZ and Griffon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AZZ	9.59%	14.85%	8.96%
Griffon	8.08%	249.31%	12.64%

Earnings & Valuation

This table compares AZZ and Griffon”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AZZ	$1.65 billion	2.50	$317.26 million	$5.55	24.80
Griffon	$2.52 billion	1.84	$51.11 million	$3.92	26.15

AZZ has higher earnings, but lower revenue than Griffon. AZZ is trading at a lower price-to-earnings ratio than Griffon, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

90.9% of AZZ shares are held by institutional investors. Comparatively, 73.2% of Griffon shares are held by institutional investors. 1.7% of AZZ shares are held by company insiders. Comparatively, 10.2% of Griffon shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

AZZ has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Griffon has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for AZZ and Griffon, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AZZ	0	3	4	0	2.57
Griffon	0	1	2	1	3.00

AZZ currently has a consensus target price of $153.20, indicating a potential upside of 11.30%. Griffon has a consensus target price of $122.50, indicating a potential upside of 19.51%. Given Griffon’s stronger consensus rating and higher probable upside, analysts plainly believe Griffon is more favorable than AZZ.

Summary

Griffon beats AZZ on 11 of the 18 factors compared between the two stocks.

About AZZ

AZZ Inc. provides hot-dip galvanizing and coil coating solutions in North America. It offers metal finishing solutions for corrosion protection, including hot-dip galvanizing, spin galvanizing, powder coating, anodizing, and plating to steel fabrication and other industries, as well as to fabricators or manufacturers that provide services to the transmission and distribution, bridge and highway, petrochemical, and general industrial markets; and original equipment manufacturers. It also provides aesthetic and corrosion protective coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation, and air conditioning; container; transportation; and other end markets. The company was incorporated in 1956 and is headquartered in Fort Worth, Texas.

About Griffon

Griffon Corporation, through its subsidiaries, provides consumer and professional, and home and building products in the United States, Europe, Canada, Australia, and internationally. The company operates through two segments: Home and Building Products, and Consumer and Professional Products. The Home and Building Products segment manufactures and markets residential and commercial sectional garage doors, rolling steel service doors, fire doors, shutters, steel security grilles, and room dividers for the use in commercial construction and repair, and home remodeling applications. The segment also sells related products, such as garage door openers. The Consumer and Professional Products segment manufactures and markets long-handled engineered tools, including spades, hoes, cultivators, weeders, post hole diggers, scrapers, edgers and forks; wheelbarrows and lawn carts; snow tools comprising pushers, roof rakes, sled sleigh shovels, scoops, and ice scrapers; and pruning products, such as pruners, loppers, shears, and other tools. The segment also offers striking tools, including axes, picks, mattocks, mauls, wood splitters, sledgehammers, pry bars, and repair handles; traditional and gardening hand tools comprising hammers, screwdrivers, pliers, adjustable wrenches, handsaws, tape measures, levels, clamps, trowels, cultivators, weeders, and other hand tools; indoor and outdoor planters and lawn accessories; and garden hoses and hose reels. In addition, the segment provides home organization products, including wire and wood shelving, containers, storage cabinets, and other closet and home organization accessories; residential, industrial, and commercial fans; and cleaning products, such as brooms, brushes, squeegees, and other cleaning products. The company was formerly known as Instrument Systems Corporation and changed its name to Griffon Corporation in June 1992. Griffon Corporation was founded in 1774 and is headquartered in New York, New York.