Graham (GHM) AI Stock Analysis

• Market Cap: $636.31M
• Dividend Yield: N/A
• Average Volume (3M): 91.57K
• Price to Earnings (P/E): 47.8
• Beta (1Y): 1.78
• Revenue Growth: 16.04%
• EPS Growth: 75.37%
• Country: US
• Employees: 595
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.28
• Shares Outstanding: 10,987,954
• 10 Day Avg. Volume: 72,024
• 30 Day Avg. Volume: 91,574
• 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: 0.94
• Enterprise Value/Revenue: 2.62
• Enterprise Value/Gross Profit: 10.53
• Enterprise Value/Ebitda: 25.75
• 1Y Price Target: $75.50
• Price Target Upside: 21.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 1.23
• Revenue Forecast (FY): $234.45M

• Rating: 69 Neutral
• Price Target: $65.00 ▲(4.96% Upside)

Graham Corporation's overall stock score reflects strong financial stability and strategic growth initiatives, particularly in defense and space markets. However, challenges in cash flow management and valuation concerns due to a high P/E ratio and lack of dividend yield weigh on the score. The earnings call provided positive insights into future growth, offsetting some of the valuation and cash flow concerns.

Positive Factors

Revenue Growth

The 23% revenue growth reflects strong demand across defense, energy, and space sectors, indicating robust market positioning and potential for sustained growth.

Record Backlog

A record backlog of $500.1 million provides visibility into future revenue, supporting long-term growth and stability, particularly with a focus on defense contracts.

Strategic Acquisition

The acquisition of Xdot Bearing Technologies expands Graham's technological capabilities, positioning it for growth in aerospace and defense markets.

Negative Factors

Gross Margin Impact

The decline in gross margin due to lower-margin material receipts could pressure profitability if not managed, affecting long-term financial health.

Impact of Tariffs

Tariff-related cost increases could erode margins, posing a challenge to maintaining profitability in the face of global trade uncertainties.

Cash Flow Management

Negative free cash flow highlights cash management challenges, which could limit investment capacity and financial flexibility if not addressed.

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

Graham demonstrates strong financial stability with consistent revenue growth and improved profitability. The balance sheet is robust with low leverage, enhancing financial resilience. However, cash flow management presents challenges, particularly with negative free cash flow in the TTM.

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: 61.93
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 61.93 is above the 20-day moving average (MA) of 57.28, above the 50-day MA of 58.78, and above the 200-day MA of 46.23, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 60.82 is Neutral, neither overbought nor oversold. The STOCH value of 78.12 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	75 Outperform	$937.72M	17.96	11.74%	―	3.08%	35.81%
LXFR	73 Outperform	$348.72M	24.67	7.14%	3.93%	3.36%	57.40%
GHM	69 Neutral	$636.31M	47.78	11.39%	―	16.04%	75.37%
HI	68 Neutral	$2.24B	52.30	3.07%	2.83%	-16.00%	―
PKOH	67 Neutral	$312.57M	10.48	8.13%	2.31%	-3.90%	61.80%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BW	56 Neutral	$378.10M	-1.90	―	―	-38.45%	-148.99%

Graham Corporate Events

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.

Graham Acquires Xdot Bearing Technologies Assets

On October 20, 2025, Graham Corporation announced the acquisition of certain assets of Xdot Bearing Technologies, a firm specializing in foil bearing technology. This acquisition is expected to enhance Graham’s subsidiary, Barber-Nichols, by integrating Xdot’s innovative foil bearing designs with its turbomachinery expertise. The move aims to expand Graham’s capabilities in designing high-speed rotating machines, targeting growth in aerospace, defense, energy transition, and industrial applications. The acquisition will also allow Barber-Nichols to offer advanced pumps and compressors, strengthening its market presence and supporting Xdot’s customers under new quality systems.