Graham (GHM) AI Stock Analysis

• Market Cap: $907.97M
• Dividend Yield: N/A
• Average Volume (3M): 107.20K
• Price to Earnings (P/E): 60.1
• Beta (1Y): 1.82
• Revenue Growth: 16.04%
• EPS Growth: 75.37%
• Country: US
• Employees: 595
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.25
• Shares Outstanding: 11,072,780
• 10 Day Avg. Volume: 87,112
• 30 Day Avg. Volume: 107,200
• PEG Ratio: 0.15
• Price to Book (P/B): 2.62
• Price to Sales (P/S): 1.49
• P/FCF Ratio: 58.53
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 3.74
• Enterprise Value/Gross Profit: 15.28
• Enterprise Value/Ebitda: 36.01
• 1Y Price Target: $100.50
• Price Target Upside: 22.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 1.22
• Revenue Forecast (FY): $236.82M

• Rating: 76 Outperform
• Price Target: $93.00 ▲(13.01% Upside)
• Action: Reiterated Date: 02/19/26
• Date: Action: Reiterated 02/19/26

Score is led by strong technical momentum and a positive operating outlook (raised guidance and record backlog), supported by a conservative balance sheet and improved profitability. Offsetting the upside are weaker recent cash-flow conversion (TTM FCF negative) and a stretched valuation (high P/E), which increase downside sensitivity to any margin or execution hiccups.

Positive Factors

Record backlog and strong bookings

A record, growing backlog provides multi-period revenue visibility and workload smoothing for manufacturing capacity planning. With a sizable portion expected to convert in the next 12 months, backlog underpins near-term organic growth and reduces sales volatility tied to project timing, improving predictability for 2–3 quarters and beyond.

Conservative balance sheet and liquidity

Extremely low leverage and substantial available credit give the company financial flexibility to fund capex, acquisitions and working capital swings without stressing cash flow. This reduces refinancing risk, supports investment in capacity/test infrastructure, and cushions the business against cyclical order timing.

Strategic acquisitions and technology expansion

Targeted M&A and IP adds broaden product mix into advanced mixing, consumables and foil-bearing tech, enabling cross-sell into defense, battery and medical markets. These moves can deepen recurring aftermarket revenue, raise long-term margin potential and diversify end-market exposure beyond core vacuum/heat-transfer systems.

Negative Factors

Weak TTM free cash flow conversion

Negative trailing twelve‑month free cash flow despite healthy earnings indicates working capital or investment absorbing cash. Persistent weak cash conversion would constrain reinvestment, make earn‑out and acquisition funding harder, and amplify sensitivity to any margin or execution setbacks over the next several quarters.

High defense backlog concentration

Heavy reliance on defense work concentrates revenue and elevates exposure to program timing, procurement cycles and government budget shifts. While defense demand can be stable, concentration limits diversification benefits and could produce step changes in revenue if contracts delay or funding priorities shift.

Acquisition earn-outs and integration costs

Material contingent earn-outs and near-term integration expenses create execution and cash obligations that can weigh on margins and free cash flow. Paying or achieving earn-outs depends on hitting performance targets, adding financial and operational risk while the company assimilates new operations and realizes projected synergies.

Graham Business Overview & Revenue Model

Company Description

Graham 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 Money

Graham generates revenue through multiple streams, including the sale of machinery and equipment, software licensing, and maintenance services. The company offers tailored solutions that meet the specific needs of its clients, which often leads to long-term contracts and repeat business. Key revenue streams include direct sales to large industrial clients, subscription fees from software products, and service agreements for ongoing support and training. Additionally, GHM has established significant partnerships with leading firms in various sectors, allowing for collaborative projects and expanded market reach, which further contributes to its earnings.

Graham Financial Statement Overview

Summary

Strong profitability recovery and conservative leverage (very low debt-to-equity) support a high-quality financial base, but cash conversion is the key drag: TTM operating cash flow is down versus the latest annual period and TTM free cash flow turned negative despite healthy earnings.

Income Statement

TTM (Trailing-Twelve-Months) results show solid profitability with ~24.6% gross margin and ~6.3% net margin, alongside positive ~4.2% revenue growth. The multi-year trajectory is favorable: annual revenue rose steadily from 2021 to 2025, and margins improved materially from the 2022 loss period to strong profitability in 2024–2025. Offsetting this, recent margin profile is not at peak versus 2025 annual (TTM EBITDA/EBIT margins are lower than the latest annual), suggesting some normalization or cost pressure despite higher sales.

Balance Sheet

Leverage is very conservative, with low debt relative to equity in both TTM (debt-to-equity ~0.05) and the latest annual periods, indicating strong balance-sheet flexibility and lower financial risk. Equity and assets have expanded over time, and returns on equity improved sharply from weak/negative levels in 2022 to ~10–12% in 2024–TTM, reflecting a healthier earnings base. The main watch item is that profitability-driven returns are doing most of the work—if margins weaken, returns could cool given the relatively modest leverage.

Cash Flow

Cash generation has become less consistent: TTM (Trailing-Twelve-Months) operating cash flow is positive (~$12.5M) but meaningfully lower than the latest annual period (~$24.3M), and TTM free cash flow is negative (~-$6.1M) after being positive in prior annual years. This indicates heavier investment or working-capital use that is currently absorbing cash, and free cash flow is not keeping pace with net income in the TTM period. Still, the company has demonstrated an ability to produce strong free cash flow in 2023–2024, so the current weakness may be cyclical rather than structural—but it raises near-term cash conversion risk.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	237.56M	209.90M	185.53M	157.12M	122.81M	97.49M
Gross Profit	58.07M	52.86M	40.59M	25.41M	9.13M	20.47M
EBITDA	24.65M	21.12M	12.35M	7.24M	-5.22M	5.22M
Net Income	14.93M	12.23M	4.56M	367.00K	-8.77M	2.37M
Balance Sheet
Total Assets	292.93M	264.11M	233.88M	203.92M	183.69M	144.28M
Cash, Cash Equivalents and Short-Term Investments	22.25M	21.58M	16.94M	18.26M	14.74M	65.03M
Total Debt	10.60M	6.85M	7.77M	20.38M	26.93M	138.00K
Total Liabilities	161.62M	144.53M	128.31M	106.98M	87.20M	46.35M
Stockholders Equity	131.31M	119.58M	105.57M	96.93M	96.49M	97.93M
Cash Flow
Free Cash Flow	-6.11M	5.36M	18.89M	10.16M	-4.54M	-3.88M
Operating Cash Flow	12.53M	24.32M	28.12M	13.91M	-2.22M	-1.72M
Investing Cash Flow	-19.38M	-19.13M	-15.99M	-3.75M	-57.11M	32.40M
Financing Cash Flow	-1.09M	-521.00K	-13.39M	-6.44M	14.42M	-4.45M

Graham Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 82.29
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 82.29 is above the 20-day moving average (MA) of 79.86, above the 50-day MA of 73.47, and above the 200-day MA of 57.35, indicating a bullish trend. The MACD of 2.41 indicates Positive momentum. The RSI at 56.90 is Neutral, neither overbought nor oversold. The STOCH value of 39.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GHM.

Graham Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
THR	82 Outperform	$1.66B	30.46	11.45%	―	3.08%	35.81%
GHM	76 Outperform	$907.97M	60.09	12.15%	―	16.04%	75.37%
PKOH	67 Neutral	$377.39M	12.65	8.13%	2.32%	-3.90%	61.80%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
LXFR	60 Neutral	$415.79M	55.06	5.88%	3.70%	3.36%	57.40%
BW	51 Neutral	$1.02B	-4.40	―	―	-38.45%	-148.99%

Graham Corporate Events

Graham Announces Leadership Transitions and Executive Appointments

On February 17, 2026, Graham Corporation announced a planned leadership transition at its Graham Manufacturing business, where long-time Vice President and General Manager Alan Smith will retire in April 2026 and move into a consulting and advisory role. William Zmyndak, a veteran manufacturing and operations executive with extensive aerospace and industrial experience, has been appointed Deputy General Manager and is expected to assume Smith’s role as Vice President and General Manager upon his retirement.

The company also named Keith Oufnac as Chief Information Officer and Rachel Jaakkola as Chief Human Resources Officer, adding depth in digital transformation, cybersecurity and talent management. These moves are part of a proactive succession and strategic leadership build-out aimed at reinforcing operational excellence, strengthening systems and people capabilities, and supporting Graham’s long-term growth strategy across its core defense, energy and space markets.

The most recent analyst rating on (GHM) stock is a Buy with a $101.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.

Graham Delivers Strong Q3 Results and Raises Guidance

On February 6, 2026, Graham Corporation reported strong third-quarter fiscal 2026 results, with revenue up 21% year over year to $56.7 million and gross profit rising 15% to $13.5 million, while net income per diluted share increased 79% to $0.25 and adjusted EBITDA climbed 50% to $6.0 million, yielding a 10.7% adjusted EBITDA margin. Orders reached $71.7 million, driving a book-to-bill ratio of 1.3x and a record backlog of $515.6 million, and the company ended the quarter with no debt, $22.3 million in cash, and $43.0 million of available revolver capacity; management highlighted robust Defense demand, steady Energy & Process and Space performance, and the January 2026 acquisition of FlackTek as key supports for its raised full-year fiscal 2026 guidance and its progress toward targeted organic growth and margin expansion by fiscal 2027.

The most recent analyst rating on (GHM) stock is a Buy with a $83.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.

Graham Expands Platform with FlackTek Advanced Mixing Acquisition

On January 23, 2026, Graham Corporation amended its credit agreement with Wells Fargo, increasing its revolving credit facility from $50 million to $80 million and allowing up to $5 million in certain credit-related obligations for its Graham India subsidiary, moves that expand the company’s financial flexibility following a major acquisition. On January 26, 2026, Graham acquired 100% of FlackTek Manufacturing and FlackTek Sales for $35 million in cash and stock plus up to $25 million in potential performance-based earnouts, adding a third core platform in advanced mixing and materials processing that complements its vacuum, heat transfer and turbomachinery businesses, broadens exposure to end markets such as defense, battery, medical, semiconductor and personal care, and is expected to enhance margins, deepen customer relationships and grow recurring revenue through consumables and aftermarket sales while keeping pro forma leverage at about 1.2x.

The most recent analyst rating on (GHM) stock is a Buy with a $84.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.