Value
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.6 |
| P/S | 8.2 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.9 |
| PEG | 4.5 |
| Analyst target | 9.0 |
- ▸Forward P/E: 30.7x
- ▸PEG: 2.03
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 a defense-exposed industrial machinery maker with strong 29% revenue growth and large analyst-target upside, but poor earnings quality (-49% FCF/NI), heavy customer concentration and a 44% drawdown make it speculative.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing strongly at 29% YoY, ranking as an industry growth leader. Growth breakdown | Quarterly revenue continues to rise from the latest $71.3M over the next 12 months. | →Stable |
| CounterEarnings growth scores 0.0/10, so top-line growth has not converted into profit growth. | ||
Earnings quality is a red flag at -49% FCF/NI, with an overall quality score of 2.9 below the 4.0 floor. Quality breakdown | Free cash flow turns positive and quality score rises above 4.0 within 12 months. | →Stable |
| CounterWorking-capital swings on large project contracts can temporarily depress free cash flow without hurting underlying profitability. | ||
Concentration is high: about 60% of the customer base is tied to defense and U.S. Navy work and the top ten customers. Bear case | Backlog diversifies so that no single customer group exceeds 60% of revenue. | ↑Improving |
| CounterLong-term Navy contracts offer visible, stable demand, so concentration may be a strength rather than a weakness. | ||
Analyst-target upside is 56.2% against 11.9% downside (reward-to-risk 4.7), but the stock is 44% off its 52-week high and RSI is 29. Estimated upside | Price recovers toward the analyst target of $109.27 after earnings. | →Stable |
| CounterCapitulation signals and a price below the 200-day average may mean the market is correctly pricing a deteriorating outlook. | ||
Earnings arrive in 4 days after 3 beats in the last 4 quarters, with an average surprise of 27.0%, creating a binary event. Earnings track record | Another beat and rising revenue estimate above $71M support the recovery. | ↓Deteriorating |
| CounterThe beats may already be priced in, and implied volatility is high at 89%, so a miss could extend the 44% drawdown. | ||
Revenue is growing strongly at 29% YoY, ranking as an industry growth leader.
→StableGrowth breakdown
- Expectation
- Quarterly revenue continues to rise from the latest $71.3M over the next 12 months.
CounterEarnings growth scores 0.0/10, so top-line growth has not converted into profit growth.
Earnings quality is a red flag at -49% FCF/NI, with an overall quality score of 2.9 below the 4.0 floor.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and quality score rises above 4.0 within 12 months.
CounterWorking-capital swings on large project contracts can temporarily depress free cash flow without hurting underlying profitability.
Concentration is high: about 60% of the customer base is tied to defense and U.S. Navy work and the top ten customers.
↑ImprovingBear case
- Expectation
- Backlog diversifies so that no single customer group exceeds 60% of revenue.
CounterLong-term Navy contracts offer visible, stable demand, so concentration may be a strength rather than a weakness.
Analyst-target upside is 56.2% against 11.9% downside (reward-to-risk 4.7), but the stock is 44% off its 52-week high and RSI is 29.
→StableEstimated upside
- Expectation
- Price recovers toward the analyst target of $109.27 after earnings.
CounterCapitulation signals and a price below the 200-day average may mean the market is correctly pricing a deteriorating outlook.
Earnings arrive in 4 days after 3 beats in the last 4 quarters, with an average surprise of 27.0%, creating a binary event.
↓DeterioratingEarnings track record
- Expectation
- Another beat and rising revenue estimate above $71M support the recovery.
CounterThe beats may already be priced in, and implied volatility is high at 89%, so a miss could extend the 44% drawdown.
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
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+2.1%/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: 78%
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
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 2.5 |
| growth rank | 8.5 |
- ▸Industry growth leader
- ▸Conservative debt levels
Technical
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.0 |
| support resistance | 7.3 |
| 52w position | 1.2 |
| gap | 5.0 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.2 |
| days to cover | 5.7 |
| volatility | 0.0 |
| put call | 7.7 |
| implied vol | 0.0 |
| beta | 6.7 |
| debt equity | 9.9 |
- ▸High IV: 89%
- ▸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 2 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:5.1>=4.5
- ASYMMETRY:4.7>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- EARNINGS_PROXIMITY:2d<=7d
Warning (2)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
4.68
Upside
+54.5%
Downside
11.7%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -44% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the EARNINGS_PROXIMITY gate's 2d<=7d outcome against Insider at 7.3 and asymmetric R:R of 4.68.
The strongest dimensions are Insider at 7.3, Sentiment at 7.1, and Catalyst at 6.3; the weakest are Quality at 2.9, Growth at 4.8, and Value at 4.8. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 4.68 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 ifRevenue growth falls below 10% YoY for 2 consecutive quarters.
- P2Earnings Quality Red Flag
Trip ifFCF-to-net-income ratio stays below 0% for 2 consecutive quarters.
- P3Customer Concentration Navy
Trip ifTop-ten customer share exceeds 70% of revenue from current 60%.
- P4Large Analyst Upside Deep Drawdown
Trip ifPrice falls below the $65.05 stop-loss level.
- P5Earnings Event Risk
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.