Graham (GHM) has posted Q3 2026 revenue of US$56.7 million with basic EPS of US$0.26, alongside trailing twelve month revenue of US$237.6 million and EPS of US$1.36, giving investors a clear view of both the latest quarter and the broader run rate. Over recent quarters the company has seen revenue move from US$47.0 million in Q3 2025 to US$56.7 million in Q3 2026, while quarterly EPS shifted from US$0.15 to US$0.26 and trailing net income reached US$14.9 million. This sets up the results as a test of how sustainable the current margin profile really is.
See our full analysis for Graham.With the headline numbers on the table, the next step is to see how this earnings profile lines up against the narratives investors follow around growth, quality and the durability of Graham's margins.
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6.3% margin puts growth in context
- Over the last 12 months, Graham converted US$237.6 million of revenue into US$14.9 million of net income, which works out to a 6.3% net margin compared with 4.6% a year earlier.
- What stands out for a bullish view is that trailing EPS climbed to US$1.36 while the net margin reached 6.3%, yet a high level of non cash earnings is flagged as a major risk, so:
- Supporters who point to 62.7% earnings growth over the year get some backing from the higher margin, but part of that improvement may not be tied to cash generation.
- Anyone focusing on quality will probably want to see how much of the US$14.9 million of net income reflects actual cash flow before leaning too heavily on the margin uplift.
Quarterly EPS swings around strong 62.7% growth
- Across the last six quarters, basic EPS moved between US$0.15 and US$0.42, with Q3 2026 at about US$0.26 and trailing 12 month EPS at US$1.36, alongside a 62.7% year over year earnings increase and a 60.4% five year average growth rate.
- Bulls often highlight that kind of 62.7% earnings growth as a key part of the story, and the quarterly pattern gives you a bit more color:
- EPS in Q1 2026, at about US$0.42, sits well above Q3 2026 at about US$0.26, which shows the business does not produce a flat line of profits even when the trailing trend looks strong.
- Net income moved from US$1.6 million in Q3 2025 to US$2.8 million in Q3 2026 and up to US$14.9 million on a trailing basis, so the growth headline is grounded in real increases, but it is not evenly spread across individual periods.
Valuation premium over industry at 61.3x P/E
- The shares trade on a P/E of 61.3x, which is close to the peer average of 62.4x but well above the broader US Machinery industry at 27.9x, while the DCF fair value of US$10.18 sits far below the current price of US$83.24.
- What critics focus on is that, despite the 62.7% earnings growth and higher 6.3% margin, the gap between the share price and DCF fair value is very wide:
- At US$83.24 against a DCF fair value of US$10.18, the stock is trading at more than 7x that modelled value, which puts a lot of emphasis on future execution and the reliability of those non cash heavy earnings.
- The premium to the 27.9x industry P/E, even while roughly matching peer multiples, suggests investors are already paying up relative to the sector, so any change in the quality of earnings could matter more for how the market prices the stock.
Next Steps
Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Graham's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.
See What Else Is Out There
Graham's 6.3% margin and 62.7% earnings growth sit against a very large premium to its DCF fair value and a 61.3x P/E multiple.
If paying up for that kind of valuation makes you uneasy, you might want to check out 53 high quality undervalued stocks that aim to pair stronger value with solid fundamentals right now.
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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