Graham (GHM) AI Stock Analysis

• Market Cap: $804.21M
• Dividend Yield: N/A
• Average Volume (3M): 98.88K
• Price to Earnings (P/E): 59.8
• Beta (1Y): 1.89
• 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: 10,987,954
• 10 Day Avg. Volume: 113,304
• 30 Day Avg. Volume: 98,881
• 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: 0.99
• Enterprise Value/Revenue: 3.49
• Enterprise Value/Gross Profit: 14.04
• Enterprise Value/Ebitda: 34.33
• 1Y Price Target: $80.00
• Price Target Upside: 8.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $81.00 ▲(9.83% Upside)

The score is driven by strong financial stability and improving operating performance, reinforced by constructive technical momentum and a positive earnings update with raised guidance and record backlog. The primary drag is valuation (high P/E) along with cash flow weakness (negative free cash flow) and near-term margin/tariff and acquisition-integration risks.

Positive Factors

Backlog & Bookings Visibility

A record $515.6M backlog with a 1.3x book-to-bill and ~35–40% expected conversion within 12 months gives durable multi-quarter revenue visibility. This backlog supports the company’s organic growth targets and reduces short-term demand cyclicality, underpinning revenue predictability through program deliveries.

Improving Profitability

A 50% YoY rise in adjusted EBITDA and a 100 bp YTD margin improvement indicate durable operational leverage from scale, pricing and cost control. Management’s raised guidance and targets for mid‑teen adjusted EBITDA margins by FY2027 suggest structural margin expansion as new programs and recent efficiency investments ramp.

Conservative Capital Structure

Very low leverage provides long-term financial flexibility to fund organic investments, M&A and capex without stressing credit profiles. The balance sheet strength enabled the FlackTek acquisition and an enlarged $80M revolver, supporting strategic growth while keeping solvency risk low.

Negative Factors

Weak Cash Conversion

Negative trailing‑12‑month free cash flow and an operating cash flow to net income ratio of ~0.09 signal persistent cash conversion issues. This constrains funding for capex, integration costs and potential earn‑outs, increasing reliance on revolving liquidity and exposing operations to tighter working capital cycles from lumpy receipts.

Defense Backlog Concentration

An ~85% defense concentration concentrates revenue risk by end market and ties growth to program timing and government budgets. While defense demand is stable now, long‑lead contract timing or budget shifts could materially affect multi‑quarter revenue conversion and hamper diversification objectives.

Acquisition Contingent Obligations & Integration Risk

The FlackTek purchase carries up to $25M of contingent earn‑outs and drove higher SG&A for integration. These obligations and integration costs can pressure margins and free cash flow if performance targets are missed, and the ~12x implied multiple on projected EBITDA heightens execution risk from realized 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

Solid fundamentals led by strong balance-sheet strength (very low leverage; improving ROE) and improving profitability with modest revenue growth. The main offset is weaker cash conversion, highlighted by negative free cash flow in the TTM and a low operating cash flow to net income ratio.

Income Statement

Graham's income statement shows a positive trajectory with a consistent increase in revenue over the past periods, highlighted by a 5.79% revenue growth in the TTM. The company has improved its profitability, with a net profit margin of 5.99% and a gross profit margin of 24.89% in the TTM. However, the EBIT and EBITDA margins have seen a decline compared to the previous annual report, indicating potential challenges in operational efficiency.

Balance Sheet

The balance sheet reflects strong financial stability, with a low debt-to-equity ratio of 0.05 in the TTM, indicating conservative leverage. The return on equity has improved to 11.27%, showcasing effective use of equity to generate profits. The equity ratio remains robust, suggesting a solid capital structure. However, the slight increase in total debt warrants monitoring.

Cash Flow

Cash flow analysis reveals mixed results. While operating cash flow remains positive, the free cash flow is negative in the TTM, indicating potential cash management issues. The operating cash flow to net income ratio is low at 0.09, suggesting limited cash generation relative to net income. The negative free cash flow growth rate and free cash flow to net income ratio highlight areas for improvement in cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	227.90M	209.90M	185.53M	157.12M	122.81M	97.49M
Gross Profit	56.72M	52.86M	40.59M	25.41M	9.13M	20.47M
EBITDA	23.19M	21.12M	12.35M	7.24M	-5.22M	5.22M
Net Income	13.67M	12.23M	4.56M	367.00K	-8.77M	2.37M
Balance Sheet
Total Assets	286.99M	264.11M	233.88M	203.92M	183.69M	144.28M
Cash, Cash Equivalents and Short-Term Investments	20.58M	21.58M	16.94M	18.26M	14.74M	65.03M
Total Debt	6.33M	6.85M	7.77M	20.38M	26.93M	138.00K
Total Liabilities	159.40M	144.53M	128.31M	106.98M	87.20M	46.35M
Stockholders Equity	127.59M	119.58M	105.57M	96.93M	96.49M	97.93M
Cash Flow
Free Cash Flow	-10.65M	5.36M	18.89M	10.16M	-4.54M	-3.88M
Operating Cash Flow	12.99M	24.32M	28.12M	13.91M	-2.22M	-1.72M
Investing Cash Flow	-23.64M	-19.13M	-15.99M	-3.75M	-57.11M	32.40M
Financing Cash Flow	-1.08M	-521.00K	-13.39M	-6.44M	14.42M	-4.45M

Graham Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 73.75
• 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 73.75 is above the 20-day moving average (MA) of 72.81, above the 50-day MA of 66.79, and above the 200-day MA of 53.80, indicating a bullish trend. The MACD of 1.71 indicates Positive momentum. The RSI at 55.74 is Neutral, neither overbought nor oversold. The STOCH value of 62.66 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	78 Outperform	$1.52B	27.76	11.45%	―	3.08%	35.81%
GHM	71 Outperform	$804.21M	59.81	11.39%	―	16.04%	75.37%
LXFR	68 Neutral	$414.99M	29.36	7.14%	3.70%	3.36%	57.40%
PKOH	67 Neutral	$358.81M	12.03	8.13%	2.32%	-3.90%	61.80%
HI	65 Neutral	$2.25B	52.37	3.07%	2.85%	-16.00%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BW	51 Neutral	$1.03B	-4.10	―	―	-38.45%	-148.99%

Graham Corporate Events

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.

Graham Reports 23% Revenue Increase for Q2 2026

On November 7, 2025, Graham Corporation reported a 23% increase in revenue to $66 million for the second quarter of fiscal 2026, with a gross profit rise of 12% to $14.3 million. The company achieved a record backlog of $500.1 million, driven by strong demand in Defense and Space markets, including new orders worth $14.8 million in Space and a $25.5 million follow-on order for the MK48 Torpedo program. Despite a slight decrease in net income margin, Graham remains focused on growth initiatives, investing in automation and advanced testing to enhance productivity and profitability, aiming for 8% to 10% annual organic revenue growth by fiscal 2027.

The most recent analyst rating on (GHM) stock is a Buy with a $68.00 price target. To see the full list of analyst forecasts on Graham stock, see the GHM Stock Forecast page.