One-glance verdict
Overvalued
$24.95 our estimate vs market $71.15
Wall Street consensus: $125.60 (403.4% higher than our fair-value estimate)
185% above our estimate, beyond the bull case
Fundamentals snapshot
Graham Corporation
GHM · NYQ · Industrials · Specialty Industrial Machinery
Current price
$71.15
52-week range
$52.57 - $125.82
Market cap
$835.09M
Balance sheet
Healthy
60.55x Strong cushion
Net cash $20.16M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 6.5% last year.
- Reward Free cash flow was positive in 6/10 years.
- Risk Net debt grew 541.8% over 3 years.
- Risk Stock trades 28.4% above its 5-year average P/E.
What this company does
Graham Corporation
Graham Corporation makes specialized equipment like pumps and heat exchangers for industries such as chemical processing and defense. Their sales come mainly from these big industrial customers, and it matters because these are long-term projects that show the company's ability to handle complex, high-tech needs.
How the company got here
Graham Corporation's story began in 1936 when Harold Graham, an engineer, patented a unique vacuum system design for sugar refining. He later partnered with Frederick Berkeley in 1941, and together they established Graham Manufacturing Co., Inc. The company initially focused on designing and manufacturing steam ejector equipment and surface condensers. Early on, they secured contracts for naval applications, including tank suction heaters during World War II. Over the decades, Graham expanded its product lines to include a wider range of heat transfer and vacuum equipment, eventually going public in 1968. The company has since grown through strategic acquisitions, such as Barber-Nichols LLC and P3 Technologies, to broaden its technological capabilities and market reach.
What it actually does
Graham Corporation designs and manufactures specialized equipment that handles fluids, power, heat transfer, and vacuum. Think of them as creating the complex machinery that helps other industries process chemicals, generate energy, or operate in extreme environments like space and defense. Their products are custom-engineered, meaning they build specific solutions for unique customer needs rather than mass-producing standard items. These are critical components for industries that require high precision and reliability.
Graham Manufacturing
This is Graham Corporation's core business, focusing on vacuum and heat transfer equipment. They produce items like surface condensers, which help power plants run more efficiently by creating a vacuum, and ejectors, which are used to remove unwanted gases or vapors. This segment serves industries such as chemical processing, petrochemicals, oil refining, and power generation. It represents a significant portion of Graham's overall business, with the U.S. being its largest market.
Barber-Nichols LLC
Acquired by Graham Corporation, Barber-Nichols specializes in turbomachinery, which are machines that transfer energy between a rotor and a fluid. This includes things like pumps, turbines, and compressors. Their expertise is particularly valuable in high-tech fields such as space exploration, aerospace, and cryogenic (very low temperature) applications, as well as in defense and energy sectors. This segment adds advanced capabilities in rotating equipment to Graham's portfolio.
FlackTek
FlackTek is another part of Graham Corporation, focusing on advanced mixing systems. These are specialized mixers, often bladeless, designed for precise and efficient mixing of various materials. This segment likely serves industries that require highly controlled mixing processes, such as in chemical, pharmaceutical, or materials science applications. It represents a smaller but distinct part of Graham's overall operations, adding specialized mixing technology.
What management is betting on now
Graham Corporation's management is focused on leveraging its deep engineering expertise to grow in key markets like defense, space, and energy. They are strategically expanding their capabilities through acquisitions, bringing in companies like Barber-Nichols and P3 Technologies to enhance their offerings in areas like turbomachinery and advanced mixing. The company is also emphasizing its custom-engineered solutions, aiming to be a go-to provider for mission-critical equipment in demanding industries. This strategy aims to drive growth by capitalizing on technological advancements and increasing demand for specialized industrial machinery.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q2
$10.45M
FY2025 Q3
$-2.11M
FY2025 Q4
$-8.71M
FY2026 Q1
$-9.26M
FY2026 Q2
$9.44M
FY2026 Q3
$2.43M
FY2026 Q4
$-2.72M
FY2027 Q1
$-15.26M
Revenue
$71.34M
Net income
$3.91M
Diluted EPS
0.33
Operating cash flow
$-12.65M
Free cash flow
$-15.26M
Fetching…
Sources
Revenue
$67.08M
Net income
$1.97M
Diluted EPS
0.17
Operating cash flow
$-151.00K
Free cash flow
$-2.72M
Fetching…
Sources
Revenue
$56.70M
Net income
$2.85M
Diluted EPS
0.25
Operating cash flow
$4.76M
Free cash flow
$2.43M
Fetching…
Sources
Revenue
$66.03M
Net income
$3.09M
Diluted EPS
0.28
Operating cash flow
$13.58M
Free cash flow
$9.44M
Fetching…
Sources
Revenue
$55.49M
Net income
$4.59M
Diluted EPS
0.42
Operating cash flow
$-2.26M
Free cash flow
$-9.26M
Fetching…
Sources
Revenue
$59.34M
Net income
$4.39M
Diluted EPS
0.40
Operating cash flow
$-3.56M
Free cash flow
$-8.71M
Fetching…
Sources
Revenue
$47.04M
Net income
$1.59M
Diluted EPS
0.14
Operating cash flow
$5.22M
Free cash flow
$-2.11M
Fetching…
Sources
Revenue
$53.56M
Net income
$3.28M
Diluted EPS
0.30
Operating cash flow
$13.93M
Free cash flow
$10.45M
Fetching…
Sources
Is it cheap or expensive?
Fair value $24.95 vs current price $71.15
Wall Street consensus is the average analyst price target: $125.60 (403.4% higher than our fair-value estimate).
Our most-likely fair value is $24.95 a share — about 64.9% below today's price of $71.15, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $20.2M - more cash than debt. Interest coverage 60.6x.
Net debt
$-20.16M
Interest coverage
60.55x
Graham Corporation's profit covers its interest bill about 60.6 times over. which is stronger than every peer shown here.
Healthy
Worse cushion
Baseline
Better cushion
GHM
BASELINE
Graham Corporation
Total debt $6.79M Interest coverage 60.55x This is the baseline the peer rows are being compared against.
Total debt $560.39M Interest coverage 4.76x -92% vs GHM Carries about 12.7x less debt cushion than GHM.
Total debt $566.29M Interest coverage 4.97x -92% vs GHM Carries about 12.2x less debt cushion than GHM.
Total debt $452.90M Interest coverage 14.18x -77% vs GHM Carries about 4.3x less debt cushion than GHM.
Total debt $510.63M Interest coverage 10.19x -83% vs GHM Carries about 5.9x less debt cushion than GHM.
What you should know
The case for and against GHM
2 Rewards
2 Risks
Rewards
-
Revenue grew 6.5% last year.
-
Free cash flow was positive in 6/10 years.
Risks
-
Net debt grew 541.8% over 3 years.
-
Stock trades 28.4% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
69.08x
Forward P/E
31.26x
P/B
4.34x
P/S
3.20x
EV/EBITDA
33.13x
PEG ratio
2.13x
Profitability
How much profit each dollar creates
Gross margin
23.4%
Operating margin
6.6%
Net margin
4.5%
ROE
7.5%
ROA
3.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.04x
Current ratio
1.23x
Quick ratio
0.89x
Total debt
$6.79M
Total cash
$26.95M
Growth
How the business has been compounding
Revenue TTM
$261.15M
Revenue 5Y CAGR
18.9%
EPS TTM
1.03
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$5.54M
Free CF TTM
$-121.00K
FCF margin
-0.0%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2021-11-08