They don't measure true intelligence.
A grade is just a letter. It can stand for different things and could be a measure how much effort that student put into the class. But as far as trying to measure that student's intelligence, I do not think a letter grade can do it justice. Some kids end up with good grades because it was an "easy" class or an "easy" teacher. There are many other variables that come into this as well. For this, school grades really are not an accurate marker of intelligence.