Earnings Beat: Graham Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a sad week for Graham Corporation (NYSE:GHM), who've watched their investment drop 14% to US$49.25 in the week since the company reported its first-quarter result. Revenues were US$55m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.42, an impressive 79% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Graham after the latest results.

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Taking into account the latest results, the consensus forecast from Graham's four analysts is for revenues of US$229.9m in 2026. This reflects an okay 6.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to dip 3.2% to US$1.22 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$232.9m and earnings per share (EPS) of US$1.16 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Graham

The consensus price target rose 13% to US$59.50, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Graham analyst has a price target of US$65.00 per share, while the most pessimistic values it at US$52.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Graham is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Graham's revenue growth is expected to slow, with the forecast 9.0% annualised growth rate until the end of 2026 being well below the historical 19% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% annually. So it's pretty clear that, while Graham's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Graham following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Graham that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.