Graham Corporation

Graham Corporation (NYSE: GHM) is a multinational corporation that develops, manufactures, and distributes vital equipment for the defense, energy, and chemical/petrochemical sectors. Heat transfer equipment, liquid vacuum pumps, fluid systems, power systems, and other associated items are among the company's primary offerings.

Key Highlights

• The company reported a 20.63% rise in revenues to USD 20.16 million in Q1FY22 (ended June 30, 2021) compared to USD 16.71 million in Q1FY21.
• However, its net losses increased to USD 3.13 million in Q1FY22 vs. USD 1.82 million reported in Q1FY21, owing to a significant increase in selling, general, and administrative (SGA) expenses.
• It operates in a highly competitive market and faces considerable pricing pressure. As a result, profit margins are anticipated to remain constrained.
• GHM provided a Return on Equity (ROE) of 2.4% in FY21 (ended March 31, 2021), much lower than the peer average of 9.5%.
• GHM announced on August 24, 2021, that it received over USD 20 million in orders post Q1FY22 end, spanning the defense/space, energy, chemical/petrochemical sectors, and also included advanced energy applications and Heating, ventilation, and air conditioning (HVAC) spaces.
• Stock is currently trading below its crucial short-term (50-day) and long-term (200-day) SMA support levels, indicating a bearish trend.
• Stock is leaning towards the lower band of the 52-week range of USD 11.84 to USD 17.44.
• GHM's stock price has declined 26.41% and 17.44% in the past six and nine months, respectively.

Technical Price Chart (as of September 10, 2021). Analysis by Kalkine

Conclusion: Considering the global pricing pressure, increase in losses, decent balance sheet, and technical indicators, we recommend a "Watch" rating on the stock at the closing price of USD 12.40, up 0.16% as of September 10, 2021.

*The reference data in this report has been partly sourced from REFINITIV.