Graham Corporation’s 8.9% return over the past six months has outpaced the S&P 500 by 7.4%, and its stock price has climbed to $31.57 per share. This run-up might have investors contemplating their next move.

Is it too late to buy GHM? Find out in our full research report, it’s free.

Why Is Graham Corporation a Good Business?

Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Graham Corporation’s 17% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Graham Corporation’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

3. Increasing Free Cash Flow Margin Juices Financials

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Graham Corporation’s margin expanded by 5.6 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat. Graham Corporation’s free cash flow margin for the trailing 12 months was 9.4%.

Final Judgment

These are just a few reasons Graham Corporation is a high-quality business worth owning, and with its shares beating the market recently, the stock trades at 25.7× forward price-to-earnings (or $31.57 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More Than Graham Corporation

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