Stock Futures – Revenue Beat: Graham Corporation Beat Analyst Estimates By 7.5%

It’s been a sad week for Graham Corporation (NYSE:GHM), who’ve watched their investment drop 13% to US$14.76 in the week since the company reported its third-quarter result. Results overall were respectable, with statutory earnings of US$0.11 per share roughly in line with what the analysts had forecast. Revenues of US$27m came in 7.5% ahead of analyst predictions. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Graham

Taking into account the latest results, the most recent consensus for Graham from three analysts is for revenues of US$107.0m in 2022 which, if met, would be a decent 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 52% to US$0.55. Before this earnings report, the analysts had been forecasting revenues of US$105.9m and earnings per share (EPS) of US$0.54 in 2022. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$22.67, suggesting that the company has met expectations in its recent result. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Graham, with the most bullish analyst valuing it at US$27.00 and the most bearish at US$19.00 per share. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Graham is forecast to grow faster in the future than it has in the past, with revenues expected to grow 13%. If achieved, this would be a much better result than the 0.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.5% per year. Not only are Graham’s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn’t be too quick to come to a conclusion on Graham. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Graham going out to 2023, and you can see them free on our platform here..

And what about risks? Every company has them, and we’ve spotted 1 warning sign for Graham you should know about.

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