Graham Holdings (GHC): Assessing Valuation After a 3-Year Share Price Surge

Graham Holdings (GHC) has been quietly rewarding patient investors, with the stock up about 28% this year and more than doubling over the past 3 years, despite relatively modest recent revenue growth.

See our latest analysis for Graham Holdings.

At around $1,108.82 per share, Graham Holdings has cooled slightly in the very short term, but its strong year to date share price return and hefty three year total shareholder return suggest momentum is still firmly on the side of long term holders.

If this kind of steady compounding appeals to you, it might be worth scanning fast growing stocks with high insider ownership for other under the radar names with aligned management and meaningful growth potential.

Yet with shares trading above analyst targets and only moderate top line growth, investors now face a tougher question: is Graham Holdings still quietly undervalued, or is the market already pricing in all that future upside?

Price-to-Earnings of 6.6x: Is it justified?

On a headline basis, Graham Holdings looks inexpensive, with its recent close at $1,108.82 equating to a modest 6.6 times earnings despite a strong multi year rally.

The price to earnings ratio compares what investors pay for each dollar of current profit, which is particularly relevant for a diversified holding company with established, cash generating operations like Graham Holdings.

With earnings having grown 13.5% per year over the past five years and surging 218% in the last twelve months, such a low multiple suggests the market is not fully rewarding that profit momentum, especially given net profit margins have stepped up meaningfully from last year.

The contrast is stark. Graham Holdings trades at 6.6 times earnings compared with 16.6 times for the broader US Consumer Services industry and 22.5 times for direct peers, underlining how deeply the shares are discounted against sector valuations.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 6.6x (UNDERVALUED)

However, investors should watch for slowing revenue growth or a de rating if analyst concerns about limited upside at current prices gain traction.

Find out about the key risks to this Graham Holdings narrative.

Another View: What Does Our DCF Say?

While the 6.6 times earnings ratio hints at value, our DCF model paints a cooler picture, putting fair value around $1,066.62 versus the current $1,108.82 share price. That small premium suggests the stock may be slightly overvalued, so is the margin of safety already gone?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Graham Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 915 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Graham Holdings Narrative

If you see the story differently, or prefer a more hands on analysis, you can build a custom view in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Graham Holdings.

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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.

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