Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.5 |
| P/S | 8.1 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.7 |
| PEG | 4.4 |
| Analyst target | 9.0 |
- ▸Forward P/E: 31.3x
- ▸PEG: 2.07
GHM · Why this verdict
Why Graham (GHM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Graham Corporation is growing revenue about 29% YoY and has beaten EPS estimates in 3 of the last 4 quarters, but heavy Navy and top-ten customer concentration, weak cash conversion and severely negative price momentum limit conviction.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing about 29% YoY, with the latest quarter at about $71.3M versus $55.5M a year earlier. Growth breakdown | Quarterly revenue should hold near or above the $71M next-quarter estimate and keep growing double digits over 12 months. | →Stable |
| CounterGrowth from defense and project-based work is lumpy and depends on timing of large orders, so a delayed program could stall the trend. | ||
EPS beat estimates in 3 of the last 4 quarters with an average surprise of about +27%, showing management is delivering ahead of expectations. Avg surprise pct | EPS should meet or beat estimates at the 2026-11-05 report and in at least 3 of the next 4 quarters. | ↓Deteriorating |
| CounterThe one miss came in the most recent comparable quarter before the beats, and low estimates in a small, lightly covered stock make beats easier to achieve. | ||
About 60% of revenue comes from the defense industry and U.S. Navy, and the top ten customers also account for 60%, so a single program change could hit results hard. Bear case | Customer concentration should stay at or below roughly 60% while the backlog diversifies over the next 12 months. | ↑Improving |
| CounterNavy work is long-dated and government-backed, so concentration may actually give revenue visibility rather than risk. | ||
Business quality is below the 4.0 floor at 2.9, with an earnings-quality red flag of -49% free cash flow to net income. Quality breakdown | Free cash flow should turn positive relative to net income over the next 12 months as working capital normalizes. | →Stable |
| CounterFree cash flow for project manufacturers swings with customer milestone payments, so a negative reading in one period may reverse, but a ratio of -49% is far from normal. | ||
The stock is down 48% from its 52-week high with RSI at 11 and trades below the 200-day average, although that average is still rising. Momentum breakdown | Price should recover above the 200-day average, and RSI should move back above 30 over the next 12 months. | ↑Improving |
| CounterA falling on-balance volume reading and a put/call ratio of 2.00 show sellers still control the stock, so oversold conditions can persist. | ||
Revenue is growing about 29% YoY, with the latest quarter at about $71.3M versus $55.5M a year earlier.
→StableGrowth breakdown
- Expectation
- Quarterly revenue should hold near or above the $71M next-quarter estimate and keep growing double digits over 12 months.
CounterGrowth from defense and project-based work is lumpy and depends on timing of large orders, so a delayed program could stall the trend.
EPS beat estimates in 3 of the last 4 quarters with an average surprise of about +27%, showing management is delivering ahead of expectations.
↓DeterioratingAvg surprise pct
- Expectation
- EPS should meet or beat estimates at the 2026-11-05 report and in at least 3 of the next 4 quarters.
CounterThe one miss came in the most recent comparable quarter before the beats, and low estimates in a small, lightly covered stock make beats easier to achieve.
About 60% of revenue comes from the defense industry and U.S. Navy, and the top ten customers also account for 60%, so a single program change could hit results hard.
↑ImprovingBear case
- Expectation
- Customer concentration should stay at or below roughly 60% while the backlog diversifies over the next 12 months.
CounterNavy work is long-dated and government-backed, so concentration may actually give revenue visibility rather than risk.
Business quality is below the 4.0 floor at 2.9, with an earnings-quality red flag of -49% free cash flow to net income.
→StableQuality breakdown
- Expectation
- Free cash flow should turn positive relative to net income over the next 12 months as working capital normalizes.
CounterFree cash flow for project manufacturers swings with customer milestone payments, so a negative reading in one period may reverse, but a ratio of -49% is far from normal.
The stock is down 48% from its 52-week high with RSI at 11 and trades below the 200-day average, although that average is still rising.
↑ImprovingMomentum breakdown
- Expectation
- Price should recover above the 200-day average, and RSI should move back above 30 over the next 12 months.
CounterA falling on-balance volume reading and a put/call ratio of 2.00 show sellers still control the stock, so oversold conditions can persist.
Per-dimension breakdown
Quality
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.5 |
| ROA | 2.1 |
| Gross margin | 0.7 |
| Op margin | 2.7 |
| Net margin | 2.3 |
| Current ratio | 4.7 |
| FCF quality | 0.0 |
| Moat | 6.4 |
| Piotroski F | 4.4 |
- ▸Earnings quality RED FLAG: -49% FCF/NI
- ▸Quality concerns
Growth
4.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.7 |
| EPS growth | 0.0 |
- ▸Strong growth: 29% YoY
Momentum
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 6.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 1.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+2.6%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 9.9 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Analyst upside: 77%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.9 |
| quality rank | 2.5 |
| growth rank | 8.5 |
- ▸Industry growth leader
- ▸Conservative debt levels
Technical
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.4 |
| support resistance | 7.3 |
| 52w position | 1.3 |
| gap | 5.0 |
Risk (lower is worse)
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.2 |
| days to cover | 5.7 |
| volatility | 0.0 |
| put call | 7.7 |
| implied vol | 1.0 |
| beta | 6.7 |
| debt equity | 9.9 |
- ▸High IV: 74%
- ▸Concentration risks: 3 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 6 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:4.6>=4.5
- ASYMMETRY:4.5>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- EARNINGS_PROXIMITY:6d<=7d
Warning (2)
- MOMENTUM:4.6<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
4.47
Upside
+53.6%
Downside
12.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -43% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the EARNINGS_PROXIMITY gate's 6d<=7d outcome against Insider at 7.3 and asymmetric R:R of 4.47.
The strongest dimensions are Insider at 7.3, Sentiment at 7.1, and Catalyst at 6.3; the weakest are Quality at 2.9, Momentum at 4.6, and Value at 4.7. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 4.47 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Revenue Growth
Trip ifQuarterly revenue falls below $55M, the year-ago level, or YoY growth falls below 10%.
- P2Consistent Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Customer Concentration Risk
Trip ifDefense and Navy share of revenue exceeds 70% from the current 60%.
- P4Weak Cash Conversion Quality
Trip ifFree cash flow to net income stays below -25% for 2 more quarters.
- P5Deeply Oversold Price Momentum
Trip ifPrice falls below $61.47, the stop level, from the current $66.10.