Graham Corporation’s (NYSE:GHM) Q2 CY2026: Strong Sales

Industrial fluid and energy systems manufacturer Graham Corporation (NYSE: GHM) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 28.6% year on year to $71.34 million. The company expects the full year’s revenue to be around $290 million, close to analysts’ estimates. Its non-GAAP profit of $0.49 per share was 32.4% above analysts’ consensus estimates.

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Company Overview

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.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Graham Corporation’s 20.9% annualized revenue growth over the last five years was incredible. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Graham Corporation’s annualized revenue growth of 17.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Graham Corporation reported robust year-on-year revenue growth of 28.6%, and its $71.34 million of revenue topped Wall Street estimates by 8.7%.

Looking ahead, sell-side analysts expect revenue to grow 13.4% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and indicates the market sees success for its products and services.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Graham Corporation was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Graham Corporation’s operating margin rose by 8.6 percentage points over the last five years, as its sales growth gave it immense operating leverage.

In Q2, Graham Corporation generated an operating margin profit margin of 5.8%, down 3 percentage points year on year. Since Graham Corporation’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Graham Corporation’s EPS grew at 59.4% compounded annual growth rate over the last five years, higher than its 20.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Graham Corporation’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Graham Corporation’s operating margin declined this quarter but expanded by 8.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Graham Corporation, its two-year annual EPS growth of 27.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, Graham Corporation reported adjusted EPS of $0.49, up from $0.45 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Graham Corporation’s full-year EPS to grow 33.7% from $1.44 to $1.93.

Key Takeaways from Graham Corporation’s Q2 Results

It was good to see Graham Corporation beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EBITDA guidance missed. Overall, we think this was a mixed quarter. The stock remained flat at $104.57 immediately following the results.

Graham Corporation may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).