Griffon vs. Carlisle: Which Industrial Conglomerate Stock has Greater Upside?

Core Viewpoint - Griffon Corporation (GFF) and Carlisle Companies Incorporated (CSL) are both key players in the Zacks Diversified Operations industry, focusing on innovative home and building envelope products and solutions. The article evaluates their growth prospects and challenges to determine which company presents a better investment opportunity today [1][2]. Griffon Corporation (GFF) - GFF is experiencing strong fundamentals in the Home and Building Products segment, with stable demand driven by repair and remodeling activities. The U.S. residential construction market is expected to recover, supported by builder incentives and anticipated interest rate cuts [3]. - The Consumer and Professional Products (CPP) segment faces challenges due to reduced consumer demand in North America and the UK, particularly for outdoor tools and decor [4]. - GFF has expanded its business through acquisitions, notably acquiring Pope, an Australia-based company, which is expected to generate annual revenues of approximately $25 million and positively impact earnings in its first full year [5]. - GFF is committed to shareholder returns, paying dividends of $23.4 million and repurchasing shares worth $72.9 million in the fiscal second quarter. The company also approved a new $400 million share repurchase authorization and increased its quarterly dividend by 20% [6]. Carlisle Companies Incorporated (CSL) - CSL is experiencing strong momentum in the Construction Materials segment, driven by high demand for reroofing products and increased sales in the non-residential construction market due to the acquisition of MTL [7]. - The Weatherproofing Technologies segment is negatively impacted by lower volumes in the residential construction market and project delays, attributed to high interest rates and unfavorable weather conditions [8]. - CSL rewarded shareholders with a dividend payment of $45.2 million and share buybacks worth $400 million in the first three months of 2025, along with an 18% dividend hike in August 2024 [9]. - The company is facing rising raw material and labor costs, which are increasing direct expenses and selling, general, and administrative expenses. In the first quarter, the cost of sales rose by 1.8% year over year, while selling and administrative expenses increased by 16.3% [10][11]. Financial Performance and Valuation - The Zacks Consensus Estimate for GFF's fiscal 2025 sales indicates a year-over-year decline of 1.2%, while EPS is expected to grow by 11.5%. GFF's EPS estimates have been trending upward over the past 60 days [12]. - In contrast, CSL's 2025 sales and EPS estimates imply year-over-year growth of 4.9% and 10.3%, respectively, but its EPS estimates have declined over the past 60 days [12]. - Over the past year, CSL's shares have decreased by 4.9%, while GFF's stock has increased by 5.4% [15]. - CSL is trading at a forward price-to-earnings ratio of 17.15X, above its three-year median of 14.84X, while GFF's forward earnings multiple is at 11.41X, close to its median of 10.66X [17]. Conclusion - Both companies hold a Zacks Rank 3 (Hold), making investment decisions challenging. CSL's strength in Construction Materials is offset by weaknesses in its Weatherproofing Technologies unit and rising costs, suggesting caution for investors [18]. - Conversely, GFF's strengths in the Home and Building Products segment, growth investments, and shareholder-friendly policies indicate a more favorable outlook, making it a more attractive investment option compared to CSL [19].