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Graham Corp. (GHM)
NYSE:GHM

Graham (GHM) AI Stock Analysis

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Graham

(NYSE:GHM)

Rating:74Outperform
Price Target:
$56.00
▲(6.16%Upside)
Graham Corporation's overall stock score of 74 reflects its strong financial performance and positive earnings call insights. However, high valuation metrics and potential technical corrections temper the outlook. Strategic corporate events and management transitions are handled positively, supporting future growth.

Graham (GHM) vs. SPDR S&P 500 ETF (SPY)

Graham Business Overview & Revenue Model

Company DescriptionGraham Corporation, together with its subsidiaries, designs and manufactures fluid, power, heat transfer, and vacuum equipment for chemical and petrochemical processing, defense, space, petroleum refining, cryogenic, energy, and other industries. It offers power plant systems comprising ejectors and surface condensers; torpedo ejection and power systems, such as turbines, alternators, regulators, pumps, and blowers; and thermal management systems, including pumps, blowers, and electronics. The company also provides rocket propulsion systems, such as turbopumps and fuel pumps; cooling systems comprising pumps, compressors, fans, and blowers; and life support systems, including fans, pumps, and blowers. In addition, it offers heat transfer and vacuum systems comprising ejectors, process condensers, surface condensers, liquid ring pumps, heat exchangers, and nozzles, as well as turbomachinery products; and power generation systems, including turbines, generators, compressors, and pumps. The company also services and sells spare parts for its equipment. It sells its products directly in the United States, the Middle East, Canada, Asia, South America, and internationally. Graham Corporation was founded in 1936 and is headquartered in Batavia, New York.
How the Company Makes MoneyGraham Corporation generates revenue primarily through the sale of its engineered products and solutions to a diverse customer base, including prominent defense contractors, refineries, and chemical plants. The company earns income by designing and manufacturing customized systems that meet specific client needs and industry standards. Additionally, Graham engages in after-sales services and support, which provides recurring revenue through maintenance, repairs, and upgrades. Strategic partnerships and contracts, especially in the defense sector, also play a significant role in the company's earnings by providing steady, long-term revenue streams.

Graham Earnings Call Summary

Earnings Call Date:Jun 09, 2025
(Q4-2025)
|
% Change Since: 25.60%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance with significant revenue growth, record backlog, and strategic investments, particularly in the defense sector. However, there were concerns regarding the impact of tariffs and a decrease in annual orders. Overall, the company appears well-positioned for future growth.
Q4-2025 Updates
Positive Updates
Strong Revenue Growth
Full year revenue grew approximately 13% to $210 million and adjusted EBITDA increased 69% to $22.4 million.
Record Backlog
Record backlog of $412 million as of March 31, up 7% sequentially.
Defense Market Success
Received a $136.5 million contract award for the Virginia-class submarine program, demonstrating strong ties with the U.S. Navy.
Strategic Investments
Strategic investments totaling $3.6 million in capabilities for evaluating critical welds, with a target ROI exceeding 20%.
Improved Gross Margin
Gross margin expanded 110 basis points to 27% in the quarter and 330 basis points to 25.2% for the year.
Positive Book-to-Bill Ratio
Maintained a positive book-to-bill ratio of 1.1 for the fifth consecutive year.
Negative Updates
Tariff Impact on Future Results
Expected impact of tariffs on fiscal 2026 results estimated to be approximately $2 million to $5 million.
Decline in Annual Orders
Orders decreased to $231 million compared to $268 million in fiscal 2024, primarily due to lumpiness in defense market orders.
Company Guidance
During the fiscal fourth quarter and full year 2025 earnings call for Graham Corporation, guidance focused on several key performance metrics. The company reported a revenue growth of approximately 13% year-over-year, reaching $210 million, with an adjusted EBITDA increase of 69% to $22.4 million, representing 10.7% of sales. A notable highlight was a record backlog of $412 million as of March 31, which grew 7% sequentially, and a book-to-bill ratio of 1.1, marking the fifth consecutive year above 1.0. The defense segment, particularly through the U.S. Navy programs, was a significant contributor, with the award of a $136.5 million contract for mission-critical equipment for the Virginia-class submarine program. The company also announced a strategic investment of $2.2 million to enhance capabilities in evaluating critical welds, complementing a $13.5 million investment for capacity expansion initiatives. Looking ahead, Graham expects capital expenditures to be 7% to 10% of sales, with an increase in R&D spending to 1% to 2% of revenue, aiming for a return on investment exceeding 20%. These strategic measures aim to support long-term organic growth goals of 8% to 10% and achieving low to mid-teens adjusted EBITDA margins by fiscal 2027.

Graham Financial Statement Overview

Summary
Graham exhibits strong financial performance with substantial revenue and profit growth. The company maintains a solid balance sheet with low leverage and robust equity. Cash flows are improving but have been historically volatile, highlighting a need for stability.
Income Statement
85
Very Positive
Graham shows a robust improvement in its financial performance, evidenced by substantial revenue growth from the previous year and strong profitability metrics. The gross profit margin stands at 25.19%, reflecting efficient cost management. Notably, the net profit margin improved to 5.83%, showcasing enhanced operational efficiency. The EBIT margin of 7.24% and EBITDA margin of 10.06% further highlight the company's profitability improvements. However, these gains are offset by the volatility seen in past years, where profitability was inconsistent.
Balance Sheet
80
Positive
The company's balance sheet is strong, with a low debt-to-equity ratio of 0.06, indicating conservative leverage and financial stability. The equity ratio is robust at 45.29%, suggesting a solid equity base relative to total assets. Return on equity (ROE) is healthy at 10.23%, reflecting effective utilization of shareholders' equity. Despite these strengths, historical fluctuations in equity and liabilities highlight potential risks.
Cash Flow
78
Positive
Graham's cash flow statements reveal a positive trajectory with improved free cash flow, indicating better cash generation capabilities. The operating cash flow to net income ratio is strong at 1.99, underscoring efficient cash conversion. Free cash flow to net income ratio is 0.44, showing adequate free cash flow relative to earnings. However, historical volatility in cash flows poses a potential risk.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue209.90M185.53M43.03M122.81M97.49M
Gross Profit52.86M40.59M7.16M9.13M20.47M
EBITDA21.12M11.25M7.62M-5.17M5.22M
Net Income12.23M4.56M-481.00K-8.77M2.37M
Balance Sheet
Total Assets264.11M233.88M203.92M183.69M144.28M
Cash, Cash Equivalents and Short-Term Investments21.58M16.94M18.26M14.74M65.03M
Total Debt6.85M7.77M20.38M26.93M138.00K
Total Liabilities144.53M128.31M106.98M87.20M46.35M
Stockholders Equity119.58M105.57M96.93M96.49M97.93M
Cash Flow
Free Cash Flow5.36M18.89M10.16M-4.54M-3.88M
Operating Cash Flow24.32M28.12M13.91M-2.22M-1.72M
Investing Cash Flow-19.13M-15.99M-3.75M-57.11M32.40M
Financing Cash Flow-521.00K-13.39M-6.44M14.42M-4.45M

Graham Technical Analysis

Technical Analysis Sentiment
Positive
Last Price52.75
Price Trends
50DMA
40.33
Positive
100DMA
36.03
Positive
200DMA
37.25
Positive
Market Momentum
MACD
3.07
Negative
RSI
75.13
Negative
STOCH
84.18
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GHM, the sentiment is Positive. The current price of 52.75 is above the 20-day moving average (MA) of 47.26, above the 50-day MA of 40.33, and above the 200-day MA of 37.25, indicating a bullish trend. The MACD of 3.07 indicates Negative momentum. The RSI at 75.13 is Negative, neither overbought nor oversold. The STOCH value of 84.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GHM.

Graham Risk Analysis

Graham disclosed 47 risk factors in its most recent earnings report. Graham reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Graham Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$367.13M21.1421.33%3.74%-6.47%-9.76%
76
Outperform
$345.36M16.089.61%4.10%1.63%7162.39%
GHGHM
74
Outperform
$577.53M47.6410.86%13.13%164.29%
70
Neutral
$139.46M19.3215.52%-1.02%-7.87%
68
Neutral
£2.99B10.397.71%3.37%3.01%-10.61%
65
Neutral
$136.95M33.222.77%1.65%11.49%-66.66%
62
Neutral
$273.49M7.2012.58%2.60%-0.59%190.35%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GHM
Graham
52.75
24.26
85.15%
OFLX
Omega Flex
36.37
-12.87
-26.14%
PKOH
Park-Ohio Holdings
19.22
-4.84
-20.12%
TAYD
Taylor Devices
44.46
2.26
5.36%
TWIN
Twin Disc
9.68
-2.66
-21.56%
LXFR
Luxfer
12.68
1.61
14.54%

Graham Corporate Events

Business Operations and Strategy
Graham Highlights Strategic Growth at Wells Fargo Conference
Positive
Jun 12, 2025

On June 12, 2025, Graham Corporation participated in the Wells Fargo 2025 Industrials Conference, presenting its strategic focus on margin expansion and disciplined growth through strategic ROIC projects. The company highlighted its strong position in the defense sector, with significant revenue opportunities from U.S. defense budgets and shipbuilding programs, and a projected $1.7 billion revenue opportunity through 2056 based on strategic platform projections.

The most recent analyst rating on (GHM) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.

Executive/Board ChangesFinancial Disclosures
Graham Announces CEO Transition Effective June 10, 2025
Positive
Jun 9, 2025

Graham Corporation reported strong financial results for the fourth quarter and full fiscal year 2025, ending March 31, 2025, with a 21% increase in revenue to $59.3 million and a significant improvement in operating margin from 3.1% to 9.3%. The company also announced a planned management transition effective June 10, 2025, with CEO Daniel J. Thoren transitioning to Executive Chairman and Strategic Advisor, and Matt Malone stepping in as the new CEO.

The most recent analyst rating on (GHM) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.

Executive/Board Changes
Graham Updates Executive Incentive and Bonus Plans
Neutral
Jun 6, 2025

On June 2, 2025, Graham Corporation’s Compensation Committee renewed and amended its Annual Long-Term Incentive Award Plan for Senior Executives for fiscal year 2026. The plan includes grants of time-vesting and performance-vesting restricted stock units to named executive officers, with vesting conditions tied to continued employment and specific performance metrics. Additionally, the company amended its Annual Executive Cash Bonus Program, setting target bonus levels based on the attainment of company and personal objectives. The Compensation Committee also approved stock-based grants for non-employee directors.

The most recent analyst rating on (GHM) stock is a Buy with a $52.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 27, 2025