Graham (GHM) AI Stock Analysis

• Market Cap: $506.15M
• Dividend Yield: N/A
• Average Volume (3M): 80.74K
• Price to Earnings (P/E): 41.8
• Beta (1Y): 1.61
• Revenue Growth: 11.22%
• EPS Growth: 229.35%
• Country: US
• Employees: 595
• Sector: Industrials
• Sector Strength: 85
• Industry: Industrial - Machinery
• EPS (TTM): 0.40
• Shares Outstanding: 10,948,443
• 10 Day Avg. Volume: 119,442
• 30 Day Avg. Volume: 80,742
• PEG Ratio: 3.05
• Price to Book (P/B): 1.43
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 13.66
• Enterprise Value/Market Cap: 0.28
• Enterprise Value/Revenue: 0.18
• Enterprise Value/Gross Profit: 2.90
• Enterprise Value/Ebitda: 2.61
• 1Y Price Target: $52.00
• Price Target Upside: 12.48% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 77 Outperform
• Price Target: ―

Graham Corporation exhibits strong financial performance and positive earnings call highlights, including revenue growth and strategic initiatives. Despite these strengths, the stock's relatively high valuation and some operational challenges, such as declining refining revenue, temper the overall score.

Graham Business Overview & Revenue Model

Company Description

Graham Corporation (GHM) is a global leader in the design and manufacture of engineered equipment for the oil refining, petrochemical, and defense industries. The company specializes in producing vacuum and heat transfer products such as ejectors, pumps, condensers, and heat exchangers. With a strong emphasis on innovation and quality, Graham Corporation serves a diverse range of industries, ensuring efficient and reliable operations for its clients worldwide.

How the Company Makes Money

Graham Corporation makes money primarily through the sale of its specialized engineered equipment and systems. Its revenue streams are diversified across several key industries, including oil refining, petrochemical, and defense sectors. The company earns income by designing, manufacturing, and selling vacuum and heat transfer products that are critical for industrial operations. Additionally, Graham Corporation benefits from aftermarket services, including spare parts and maintenance support, which provide a steady stream of revenue. Strategic partnerships and long-term contracts with major industrial clients also contribute significantly to its earnings, ensuring a stable and recurring income base.

Graham Financial Statement Overview

Summary

Overall, Graham exhibits strong financial performance with impressive revenue growth and profitability improvements. The company maintains a healthy balance sheet with low leverage, and its cash flow generation is robust. While the financial position is solid, continued attention to liabilities and capital expenditures is advisable to sustain long-term growth and financial stability.

Income Statement

The income statement shows strong revenue growth with a 7.6% increase in revenue from the previous annual report to TTM, and a significant improvement in profitability metrics. The gross profit margin is healthy at 24.6%, and the TTM net profit margin is 4.6%, reflecting a rebound from previous losses. The EBIT margin at 4.4% and EBITDA margin at 6.1% indicate operational efficiencies and improved earnings quality.

Balance Sheet

The balance sheet reflects a stable financial position with a low debt-to-equity ratio of 0.06, indicating minimal leverage. Return on Equity (ROE) is moderate at 8.0%, showing decent profitability relative to equity. The equity ratio is healthy at 43.3%, implying a solid capital base. However, the increase in liabilities over the past year suggests a need for cautious monitoring.

Cash Flow

Cash flow analysis reveals a robust operating cash flow with a significant increase in free cash flow, growing by 4.1% from the previous annual report to TTM. The operating cash flow to net income ratio is strong at 4.1, indicating efficient cash generation relative to earnings. The free cash flow to net income ratio of 2.1 underscores solid cash profitability. However, the negative investing cash flow signals substantial capital expenditures, which need to be managed carefully.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
199.62M	185.53M	43.03M	122.81M	97.49M	90.60M
	Gross Profit
48.67M	40.59M	7.16M	9.13M	20.47M	18.15M
	EBIT
11.22M	6.92M	-232.00K	-11.34M	3.00M	2.32M
	EBITDA
16.98M	11.25M	7.62M	-5.17M	5.22M	4.29M
	Net Income Common Stockholders
9.18M	4.56M	-481.00K	-8.77M	2.37M	1.87M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
30.05M	16.94M	18.26M	14.74M	65.03M	73.00M
	Total Assets
264.25M	233.88M	203.92M	183.69M	144.28M	148.12M
	Total Debt
6.84M	7.77M	20.38M	26.93M	138.00K	330.00K
	Net Debt
-23.21M	-9.17M	2.12M	12.19M	-59.39M	-32.63M
	Total Liabilities
149.82M	128.31M	106.98M	87.20M	46.35M	51.40M
	Stockholders Equity
114.43M	105.57M	96.93M	96.49M	97.93M	96.72M
Cash Flow		Free Cash Flow
19.67M	18.89M	10.16M	-4.54M	-3.88M	-1.18M
	Operating Cash Flow
37.50M	28.12M	13.91M	-2.22M	-1.72M	1.24M
	Investing Cash Flow
-18.00M	-15.99M	-3.75M	-57.11M	32.40M	20.88M
	Financing Cash Flow
-4.57M	-13.39M	-6.44M	14.42M	-4.45M	-4.51M

Graham Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 46.23
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 46.23 is above the 20-day moving average (MA) of 40.89, above the 50-day MA of 35.19, and above the 200-day MA of 36.02, indicating a bullish trend. The MACD of 3.06 indicates Negative momentum. The RSI at 76.04 is Negative, neither overbought nor oversold. The STOCH value of 61.71 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
GHM	77 Outperform	$506.15M	41.75	10.86%	―	11.22%	229.35%
LXFR	72 Outperform	$314.58M	14.65	9.61%	4.50%	1.63%	7162.39%
OFLX	71 Outperform	$316.15M	18.21	21.33%	4.34%	-6.47%	-9.76%
TAYD	70 Neutral	$111.26M	15.41	15.52%	―	-1.02%	-7.87%
Sector *	66 Neutral	$4.47B	12.21	5.40%	3.65%	4.14%	-12.00%
PKOH	63 Neutral	$245.32M	6.46	12.58%	2.90%	-0.59%	190.35%
TWIN	62 Neutral	$109.79M	26.63	2.77%	2.06%	11.49%	-66.66%

Graham Corporate Events

Graham Corporation Reports Strong Q3 2025 Results

On February 7, 2025, Graham Corporation reported its third-quarter fiscal 2025 results, showcasing a 7.3% increase in revenue to $47 million, driven by strong demand in defense and space markets. The company improved its gross profit margin to 24.8% and net income per diluted share rose significantly by 600% to $0.14. Graham Corporation highlighted its robust balance sheet with no debt and reiterated its full-year guidance, emphasizing confidence in long-term growth targets.

Graham Announces Key Leadership Changes for 2025

On February 5, 2025, Graham Corporation announced key leadership changes as part of its succession plan. Daniel J. Thoren will transition from President and CEO to Executive Chairman and Strategic Advisor starting June 10, 2025, while Matthew J. Malone will become President and COO effective February 5, 2025, and is set to assume the CEO role in June 2025. These changes aim to strengthen the executive team and ensure a seamless leadership transition to support the company’s growth. Thoren’s compensation remains unchanged until his transition, after which he will have a base salary of $250,000 and be eligible for bonuses. Malone’s annual base salary will be $400,000 as COO and increase to $480,000 as CEO. Both executives have provisions in their agreements for compensation in the event of termination without cause or resignation under specific conditions.