Graham shares climb after Q3 beat, guidance raise
Record backlog, strong defense exposure support revised FY26 outlook
Graham Corporation shares advanced after the New York-based manufacturer of vacuum and heat transfer equipment reported fiscal third-quarter results that exceeded analyst expectations and lifted full-year guidance, underpinned by a record backlog and heavy exposure to the defense sector.
For the quarter ended December 31, 2025, Graham posted adjusted earnings of $0.31 per share, well ahead of the consensus estimate of $0.18, according to TipRanks. Net sales rose 21% year-over-year to $56.7 million, surpassing analysts' revenue projection of approximately $52.35 million, as reported by Longbridge. Net income increased 79% to $2.8 million, or $0.25 per diluted share, while adjusted EBITDA climbed 50% to $6.0 million, yielding a 10.7% margin.
The company raised its full-year fiscal 2026 guidance. Management now expects net sales of $233 million to $239 million, up from the prior range of $225 million to $235 million. The outlook for adjusted EBITDA was increased to $24 million to $28 million from $22 million to $28 million. These forecasts constitute forward-looking statements and are subject to risks and uncertainties.
Graham's backlog reached a record $515.6 million as of December 31, 2025, representing a 34% increase year-over-year. Approximately 85% of the backlog is derived from the defense sector, according to StockTitan. The company reported a book-to-bill ratio of 1.3x for the third quarter. The balance sheet remains strong, with no debt and cash of $22.3 million.
Market data as of February 6, 2026 shows Graham shares at $73.75, up 0.77% for the session. The stock has a 52-week high of $79.13 and a 52-week low of $24.78. Analysts have set an average price target around $75.50, per MarketBeat. Ratings consensus is mixed: some analysts recommend a buy, while the broader consensus remains a hold.
Analyst commentary following the earnings release has been nuanced. Northland downgraded the stock to "Market Perform" from "Outperform" and raised its price target to $80 from $71, noting that the stock may be approaching full valuation and pointing to a potential slowdown in order growth for the second half of 2026, according to Finviz. Other analysts highlighted the record backlog and strong execution across end markets, particularly in defense and energy & process.
Graham supplies mission-critical fluid, power, heat transfer, and vacuum technologies to the defense, energy & process, and space industries. The record backlog and elevated book-to-bill ratio provide near-term visibility, though some analysts have raised caution about possible moderation in order pace later in the fiscal year.
Looking ahead, investors will focus on the company's ability to convert its backlog into revenue and whether defense-related demand remains robust. Potential risks include order growth moderation and macroeconomic conditions affecting capital spending. The company is scheduled to hold a conference call to discuss its results, strategy, and outlook at 11:00 a.m. Eastern Time on February 6, 2026.