Graham (GHM) Surges 3.5%: Is This an Indication of Further Gains?

Graham Corporation GHM shares rallied 3.5% in the last trading session to close at $107.57. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 5.7% gain over the past four weeks.

Graham Corporation’s rally is largely driven by optimism over solid momentum in the defense end market, driven by strong program execution, capacity expansion and healthy demand across key naval defense platforms. Also, growth in existing programs in the space end market bodes well for the company.

This maker of vacuum and heat-transfer equipment is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of -20%. Revenues are expected to be $66.68 million, up 20.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Graham, the consensus EPS estimate for the quarter has been revised 20.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on GHM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Graham is a member of the Zacks Manufacturing - General Industrial industry. One other stock in the same industry, Parker-Hannifin PH, finished the last trading session 1.7% higher at $918.86. PH has returned 4.7% over the past month.

For Parker-Hannifin, the consensus EPS estimate for the upcoming report has changed -0.1% over the past month to $8.33. This represents a change of +8.3% from what the company reported a year ago. Parker-Hannifin currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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