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Graham Corporation (GHM) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Graham (GHM - Free Report) ? Shares have been on the move with the stock up 9.7% over the past month. The stock hit a new 52-week high of $17.99 in the previous session. Graham has gained 86.9% since the start of the year compared to the 0.1% move for the Zacks Industrial Products sector and the 11.6% return for the Zacks Manufacturing - General Industrial industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 6, 2023, Graham reported EPS of $0.04 versus consensus estimate of $-0.06 while it beat the consensus revenue estimate by 7.43%.
For the current fiscal year, Graham is expected to post earnings of $0.31 per share on $175.7 million in revenues. This represents a 933.33% change in EPS on a 11.83% change in revenues. For the next fiscal year, the company is expected to earn $0.32 per share on $192.07 million in revenues. This represents a year-over-year change of 3.23% and 9.31%, respectively.
Valuation Metrics
Graham may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Graham has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 58X current fiscal year EPS estimates, which is a premium to the peer industry average of 19.6X. On a trailing cash flow basis, the stock currently trades at 26.4X versus its peer group's average of 11.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Graham currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Graham passes the test. Thus, it seems as though Graham shares could have potential in the weeks and months to come.
How Does GHM Stack Up to the Competition?
Shares of GHM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ferguson plc (FERG - Free Report) . FERG has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Ferguson plc beat our consensus estimate by 12.60%, and for the current fiscal year, FERG is expected to post earnings of $9.69 per share on revenue of $29.77 billion.
Shares of Ferguson plc have gained 2.5% over the past month, and currently trade at a forward P/E of 16.9X and a P/CF of 15.12X.
The Manufacturing - General Industrial industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for GHM and FERG, even beyond their own solid fundamental situation.
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Graham Corporation (GHM) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Graham (GHM - Free Report) ? Shares have been on the move with the stock up 9.7% over the past month. The stock hit a new 52-week high of $17.99 in the previous session. Graham has gained 86.9% since the start of the year compared to the 0.1% move for the Zacks Industrial Products sector and the 11.6% return for the Zacks Manufacturing - General Industrial industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 6, 2023, Graham reported EPS of $0.04 versus consensus estimate of $-0.06 while it beat the consensus revenue estimate by 7.43%.
For the current fiscal year, Graham is expected to post earnings of $0.31 per share on $175.7 million in revenues. This represents a 933.33% change in EPS on a 11.83% change in revenues. For the next fiscal year, the company is expected to earn $0.32 per share on $192.07 million in revenues. This represents a year-over-year change of 3.23% and 9.31%, respectively.
Valuation Metrics
Graham may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Graham has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 58X current fiscal year EPS estimates, which is a premium to the peer industry average of 19.6X. On a trailing cash flow basis, the stock currently trades at 26.4X versus its peer group's average of 11.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Graham currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Graham passes the test. Thus, it seems as though Graham shares could have potential in the weeks and months to come.
How Does GHM Stack Up to the Competition?
Shares of GHM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ferguson plc (FERG - Free Report) . FERG has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Ferguson plc beat our consensus estimate by 12.60%, and for the current fiscal year, FERG is expected to post earnings of $9.69 per share on revenue of $29.77 billion.
Shares of Ferguson plc have gained 2.5% over the past month, and currently trade at a forward P/E of 16.9X and a P/CF of 15.12X.
The Manufacturing - General Industrial industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for GHM and FERG, even beyond their own solid fundamental situation.