Value
3.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 6.5 |
| Fwd P/E | 2.3 |
| PEG | 3.5 |
| Analyst target | 5.0 |
- ▸Forward P/E: 51.5x
- ▸PEG: 3.26
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.
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Graham Corporation trades at a rich forward P/E of 51.2x with a PEG of 3.26, well above typical value thresholds, per the engine's valuation read. Valuation breakdown | Forward P/E should compress toward a more moderate multiple, below 30x, as earnings growth catches up to the current price. | →Stable |
| CounterA premium multiple can be justified if the company's earnings growth accelerates meaningfully from its current near-zero pace, especially with 3 of the last 4 quarters beating estimates. | ||
The engine flags an earnings-quality red flag: free cash flow running at -54% of net income, suggesting reported earnings aren't converting to cash. Quality breakdown | FCF-to-net-income conversion should turn positive as the red flag clears. | →Stable |
| CounterNegative FCF-to-net-income can reflect a temporary working-capital buildup tied to order backlog growth rather than a persistent earnings-quality problem. | ||
The stock shows a golden-cross breakout, trading above all major moving averages with bullish MACD and RSI at 62. Chart pattern detection | Price should continue holding above its moving averages, confirming the breakout's durability. | →Stable |
| CounterMomentum notes also show falling on-balance-volume, which can undercut a breakout's credibility despite the bullish price structure. | ||
The engine's asymmetry gate failed at -0.25, since the stock has already reached its prior price target with only -3.7% implied upside remaining. Engine gate (failed) | The asymmetry ratio should turn positive as either the price pulls back to a better entry or the analyst target is raised. | →Stable |
| CounterA negative asymmetry ratio at a reached target level often persists for a stretch if the stock simply consolidates rather than pulling back. | ||
Graham Corporation trades at a rich forward P/E of 51.2x with a PEG of 3.26, well above typical value thresholds, per the engine's valuation read.
→StableValuation breakdown
- Expectation
- Forward P/E should compress toward a more moderate multiple, below 30x, as earnings growth catches up to the current price.
CounterA premium multiple can be justified if the company's earnings growth accelerates meaningfully from its current near-zero pace, especially with 3 of the last 4 quarters beating estimates.
The engine flags an earnings-quality red flag: free cash flow running at -54% of net income, suggesting reported earnings aren't converting to cash.
→StableQuality breakdown
- Expectation
- FCF-to-net-income conversion should turn positive as the red flag clears.
CounterNegative FCF-to-net-income can reflect a temporary working-capital buildup tied to order backlog growth rather than a persistent earnings-quality problem.
The stock shows a golden-cross breakout, trading above all major moving averages with bullish MACD and RSI at 62.
→StableChart pattern detection
- Expectation
- Price should continue holding above its moving averages, confirming the breakout's durability.
CounterMomentum notes also show falling on-balance-volume, which can undercut a breakout's credibility despite the bullish price structure.
The engine's asymmetry gate failed at -0.25, since the stock has already reached its prior price target with only -3.7% implied upside remaining.
→StableEngine gate (failed)
- Expectation
- The asymmetry ratio should turn positive as either the price pulls back to a better entry or the analyst target is raised.
CounterA negative asymmetry ratio at a reached target level often persists for a stretch if the stock simply consolidates rather than pulling back.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Graham Corporation is a technical breakout trading above all moving averages, but a rich 51x forward P/E, a negative-FCF earnings-quality red flag, and a failed asymmetry gate all argue for limited further upside from current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.2 |
| ROA | 2.3 |
| Gross margin | 0.7 |
| Op margin | 0.5 |
| Net margin | 2.5 |
| Current ratio | 4.0 |
| FCF quality | 0.0 |
| Moat | 6.4 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -54% FCF/NI
- ▸Quality concerns
Growth
2.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
| EPS growth | 0.0 |
Momentum
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 5.1 |
| MA position | 6.0 |
| Volume | 1.3 |
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.3 |
| Price target | 8.0 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 23%
Insider
7.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 9.2 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.6 |
| quality rank | 3.5 |
| growth rank | 6.5 |
Technical
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.6 |
| support resistance | 6.0 |
| 52w position | 7.0 |
| gap | 6.0 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.7 |
| days to cover | 9.4 |
| volatility | 0.0 |
| put call | 9.0 |
| implied vol | 1.2 |
| beta | 7.0 |
| debt equity | 9.4 |
- ▸High IV: 73%
- ▸Concentration risks: 3 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.6<4.5
- ASYMMETRY:0.3<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.33
Upside
+4.2%
Downside
12.7%
Sizing output
AVOID
SetupRange Bound — RSI 43 mid-range, Bollinger mid-band
EdgeCatalyst-Driven — Earnings in 27d with 3/4 beat streak
SuitabilityAggressive — MCap $1.4B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Insider at 7.1 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.6<4.5.
The strongest dimensions are Insider at 7.1, Catalyst at 6.7, and Sentiment at 6.5; the weakest are Growth at 2.9, Quality at 2.9, and Value at 3.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.33 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rich Valuation High Forward Pe
Trip ifForward P/E falls below 30x, down from the current 51.2x, as the multiple compresses.
- P2Negative Fcf Earnings Quality Red Flag
Trip ifFCF-to-net-income ratio rises above 0%, turning positive from the current -54%.
- P3Technical Breakout Above Moving Averages
Trip ifRSI falls below 40 and price closes below its 200-day moving average, reversing the current breakout.
- P4Negative Asymmetry Past Target
Trip ifAsymmetry ratio rises above 0, turning positive from the current -0.25.