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Results: Graham Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts
It's been a pretty great week for Graham Corporation (NYSE:GHM) shareholders, with its shares surging 12% to US$78.02 in the week since its latest second-quarter results. Revenues were US$70m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.39 were also better than expected, beating analyst predictions by 16%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Graham's six analysts is for revenues of US$290.8m in 2027. This would reflect a meaningful 9.8% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 24% to US$1.41. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$291.0m and earnings per share (EPS) of US$1.54 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
See our latest analysis for Graham
The consensus price target held steady at US$122, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Graham, with the most bullish analyst valuing it at US$139 and the most bearish at US$100.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Graham's growth to accelerate, with the forecast 21% annualised growth to the end of 2027 ranking favourably alongside historical growth of 16% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Graham is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$122, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Graham going out to 2029, and you can see them free on our platform here.
We also provide an overview of the Graham Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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