Graham Corp Dossier - Source-backed chat

Graham Corp

GHMNYSE

SectorIndustrials

IndustrySpecialty Industrial Machinery

Beta (adjusted)1.04

Intrinsic Value $51.38median of 5 methods · middle span $38-$72based on filings through 30 Jun 2026

Market Price $86.90Price as of 1 Oct 2026

OvervaluedIntrinsic value is 41% below the market price

−50% · IV below pricenear fair value ±15%IV above price · +50%

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Market Cap $1B

Enterprise Value $993M

Shares Outstanding 11.8M diluted

Moat Rating None

Next Earnings Date9 Nov 2026

Last ex-dividend8 Nov 2021

All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference.

Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted

Thesis Summary

Graham Corporation (NYSE: GHM) is executing a highly successful transition from its 'Stabilize' phase to an 'Improve to Growth' phase, supported by record-breaking demand in its core Defense and Energy & Process markets. The company's fiscal 2026 results demonstrated robust execution with record annual revenue of $245.3 million (up 17% YoY) and a record backlog of $532.6 million (up 29% YoY). With a strong book-to-bill ratio of 1.5x and a clear three-year strategic plan (FY27-FY29) targeting an 8-10% organic revenue CAGR and 14-16% Adjusted EBITDA margins, Graham is well-positioned to deliver superior returns on invested capital (>20%). The recent $50 million investment from T. Rowe Price further strengthens its balance sheet, providing ample liquidity to pursue selective, accretive M&A and capacity expansions.

This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.

Street view · analyst 12-month targets4 analysts · as of 18 Aug 2026

Low · most bearish analyst$128.00

Mean target$130.75

High · most bullish analyst$135.00

Street targets sit above today's price; our intrinsic value sits below it. Different horizons, different questions.

Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026

Scenarios · 12-month scenario targetsAnchored at research date

Bear CaseDownside scenario

$128.0015%

Execution delays in long-cycle defense contracts, persistent supply chain bottlenecks, or unfavorable sales mix (higher lower-margin material receipts) compress gross margins. A slowdown in the Energy & Process sector or integration issues with FlackTek limit Adjusted EBITDA margin expansion to the low double digits, keeping stock performance flat.

Base CaseCentral scenario

$130.7560%

Matches the consensus mean

Graham successfully delivers on its FY27 guidance of $285M-$295M in net sales and $35M-$40M in Adjusted EBITDA. The company achieves its three-year targets of an 8-10% organic revenue CAGR and Adjusted EBITDA margins of 14-16% by FY29, supported by its robust $532.6 million backlog and steady execution of long-cycle U.S. Navy nuclear propulsion programs.

Bull CaseUpside scenario

$135.0025%

Accelerated defense spending and faster-than-expected ramp-up in the Space and Cryogenic segments drive organic revenue growth above the 10% target. Successful integration of FlackTek and subsequent high-margin acquisitions expand Adjusted EBITDA margins beyond 16% by FY29. Operational efficiencies and automation investments yield ROIC exceeding 25%.

Scenarios are anchored to street consensus at the research date, with our probabilities and rationale.

Key Investment Merits

Record backlog of $532.6 million provides multi-year revenue visibility, with approximately 60% of revenue tied to highly stable, long-cycle U.S. Navy defense programs.
Strong balance sheet with zero debt and enhanced financial flexibility following a $50 million investment from T. Rowe Price.
Ambitious and structured three-year financial targets (FY27-FY29) aiming for 8-10% organic revenue CAGR, 14-16% Adjusted EBITDA margins, and ROIC >20%

Key Investment Risks

Gross margin compression due to unfavorable sales mix and a higher proportion of lower-margin material receipts.
Execution and operational risks associated with scaling up capacity, implementing automation, and integrating acquisitions like FlackTek.
High customer concentration and reliance on government defense budgets, particularly U.S. Navy nuclear propulsion programs.

Thesis Invalidation Triggers

A significant drop in the book-to-bill ratio below 1.0x for consecutive quarters, indicating a slowdown in new orders.
Failure to achieve the lower bound of FY2027 revenue guidance ($285 million) or Adjusted EBITDA guidance ($35 million).
Material operational delays or cost overruns in key defense programs that severely impact profitability.

All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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Explore this dossier

ValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework.