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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on GHM

Graham Corporation's recent performance was driven by a series of positive developments. A strategic investment of $2.2 million from a customer to enhance production capabilities at its Batavia facility will boost efficiency and competitiveness. Additionally, the company has secured a $136.5 million follow-on contract to support the U.S. Navy's Virginia Class Submarine program, underscoring its expertise in mission-critical technologies. Graham's robust balance sheet, with no debt and $30M net cash, provides financial flexibility and security. The company's transformation from a cyclical petrochemical and energy business to a defense and space sector player has positioned it for long-term growth.

1.c. Company Highlights

2. Graham Corporation's Q3 FY2026 Earnings: A Strong Performance

Graham Corporation reported a robust third-quarter fiscal 2026 financial performance, with revenue increasing 21% to $56.7 million, driven by solid performance across end markets. The company's adjusted EBITDA margin expanded to 10.7%, resulting in a 50% increase in adjusted EBITDA to $6 million. Earnings per share (EPS) came in at $0.31, significantly beating estimates of $0.17. The strong EPS was supported by the company's solid revenue growth and margin expansion.

Publication Date: 08:22

📋 Highlights
  • Revenue Growth:: Q3 FY2026 revenue rose 21% to $56.7M, driven by $8.3M increase in defense sales and 13% growth in energy markets.
  • EBITDA Performance:: Adjusted EBITDA surged 50% to $6M, achieving a 10.7% margin, reflecting improved operational efficiency.
  • Acquisition Strategy:: Acquired Xdot Bearing ($35M + $25M earn-out) and FlackTek to expand capabilities in high-speed machinery and materials processing.
  • Backlog Expansion:: Record backlog reached $515.6M (up 34% YoY), supporting full-year revenue guidance of $233–$239M and EBITDA of $24–$28M.

Strategic Acquisitions and Growth Initiatives

The company completed two strategic acquisitions, Xdot Bearing Technologies and FlackTek, which strengthen its competitive position in high-speed rotating machinery and advanced mixing and materials processing solutions. The acquisitions, along with organic investments, position Graham for long-term growth, with a record backlog of $515.6 million, up 34% year-over-year. The company's M&A strategy focuses on investing in its three existing platform areas, with FlackTek offering a third platform across the same end markets as the other two, with opportunities for growth.

Operational Highlights and Outlook

The company has seen a significant increase in demand, with a book-to-bill ratio of 1.6 year-to-date, and expects to end the year with a ratio above its long-term target of 1.1. Graham has made significant investments in facility enhancements, including a liquid nitrogen test facility in Arvada and an assembly and test facility, which are already impacting business. The company expects its material receipts to normalize in the fourth quarter, which should help improve gross margin. Graham increased its full-year fiscal 2026 guidance, expecting revenue of $233 million to $239 million and adjusted EBITDA of $24 million to $28 million.

Valuation and Growth Prospects

With a P/E Ratio of 59.64 and an EV/EBITDA ratio of 35.92, the market appears to be pricing in significant growth expectations for Graham Corporation. Analysts estimate next year's revenue growth at 17.8%, which suggests that the company's growth prospects are attractive. The company's ROE of 11.9% and ROIC of 10.79% indicate a strong ability to generate returns on equity and invested capital. As Graham continues to execute on its growth initiatives and strategic acquisitions, investors will be watching to see if the company can meet its fiscal 2027 guidance and goals.

3. NewsRoom

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Graham Corporation Announces Appointment of William Zmyndak as Deputy General Manager of Graham Manufacturing

Feb -17

Source: businesswire.com

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Graham Corporation (NYSE:GHM) Given Consensus Rating of “Hold” by Analysts

Feb -10

Source: defenseworld.net

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Graham Q3 Earnings Call Highlights

Feb -08

Source: defenseworld.net

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Graham Corporation (GHM) Q3 2026 Earnings Call Transcript

Feb -06

Source: seekingalpha.com

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Graham (GHM) Q3 Earnings and Revenues Beat Estimates

Feb -06

Source: zacks.com

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Graham Corporation Reports Third Quarter Fiscal 2026 Results

Feb -06

Source: businesswire.com

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Earnings Preview: Graham (GHM) Q3 Earnings Expected to Decline

Jan -30

Source: zacks.com

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3 Top Lesser-Known Space Stocks to Buy Now That Are Poised to Benefit From NASA's Artemis Moon Missions

Jan -28

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.89%)

6. Segments

Defense

Expected Growth: 4.5%

Growing demand for advanced military equipment, increasing defense spending, and Graham Corporation's expertise in custom-engineered systems drive growth in the defense segment.

Refining

Expected Growth: 4.5%

Growing demand for refined petroleum products, increasing adoption of proprietary technology, and rising investments in refining capacity expansion are expected to drive the refining segment's growth.

Chemical/Petrochemical

Expected Growth: 4.5%

Growing demand for custom-engineered equipment in the chemical and petrochemical industries, driven by increasing investments in process optimization and efficiency improvements, is expected to drive the segment's growth.

Other

Expected Growth: 4.5%

Growing demand for efficient processing and refining technologies in the chemical, petrochemical, and oil refining industries drives the 'Other' segment's growth, driven by increasing global energy demands and stringent environmental regulations.

Space

Expected Growth: 7.4%

Growing demand for satellite-based services, increasing government investments in space exploration, and advancements in space technology drive the growth of Graham Corporation's Space segment.

7. Detailed Products

Surface Condensers

Graham Corporation's surface condensers are designed to condense steam or other vapors in a wide range of industrial applications.

Heat Exchangers

Graham's heat exchangers are custom-designed to transfer heat between fluids in various industrial processes.

Ejectors

Graham's ejectors are used to create vacuum or compress gases in various industrial applications.

Oil Refinery Systems

Graham's oil refinery systems are designed to improve efficiency and reduce emissions in oil refining processes.

Chemical Process Systems

Graham's chemical process systems are custom-designed to meet the specific needs of chemical processing applications.

Power Generation Systems

Graham's power generation systems are designed to improve efficiency and reduce emissions in power generation applications.

8. Graham Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Graham Corporation's products are specialized and customized, making it difficult for substitutes to emerge. However, the company's reliance on a few large customers increases the threat of substitutes.

Bargaining Power Of Customers

Graham Corporation's customers are large and have significant bargaining power, which can lead to downward pressure on prices and margins.

Bargaining Power Of Suppliers

Graham Corporation has a diverse supplier base, which reduces the bargaining power of individual suppliers. The company's long-term relationships with suppliers also help to mitigate this risk.

Threat Of New Entrants

The capital-intensive nature of Graham Corporation's business, combined with the need for specialized expertise and equipment, creates a significant barrier to entry for new competitors.

Intensity Of Rivalry

The industry in which Graham Corporation operates is highly competitive, with several established players. However, the company's focus on niche markets and its strong relationships with customers help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 17.37%
Debt Cost 3.95%
Equity Weight 82.63%
Equity Cost 6.81%
WACC 6.31%
Leverage 21.02%

11. Quality Control: Graham Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Enerpac Tool

A-Score: 5.5/10

Value: 8.6

Growth: 6.8

Quality: 7.1

Yield: 0.0

Momentum: 3.0

Volatility: 7.3

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Thermon

A-Score: 5.0/10

Value: 4.1

Growth: 5.8

Quality: 7.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

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Graham

A-Score: 5.0/10

Value: 3.3

Growth: 7.9

Quality: 5.6

Yield: 0.0

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

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Tennant

A-Score: 4.7/10

Value: 4.2

Growth: 4.7

Quality: 5.5

Yield: 3.0

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Standex

A-Score: 4.4/10

Value: 1.9

Growth: 3.9

Quality: 5.1

Yield: 2.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

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Twin Disc

A-Score: 4.0/10

Value: 3.9

Growth: 4.8

Quality: 3.5

Yield: 1.0

Momentum: 8.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

77.55$

Current Price

77.55$

Potential

-0.00%

Expected Cash-Flows