CFA Institute Research Challenge · Sep 2025 – Feb 2026
Graham Corporation (NYSE: GHM)
Equity research report and pitch, Rochester Institute of Technology team
- BUYOur recommendation
- $72.3412-month target price
- 12.6%Upside from $64.23 (Dec 31, 2025)
- 2nd placeWest NY CFA Challenge
For the CFA Institute Research Challenge, hosted by the CFA Societies of Rochester and Buffalo, our RIT team initiated coverage on Graham Corporation. Graham is a Batavia, NY manufacturer of engineered vacuum, heat-transfer and turbomachinery systems used in U.S. Navy ships, energy processing and space programs. We recommended a BUY with a 12-month target price of $72.34.
Our thesis had three parts: defense-led growth protected by high barriers to entry and a long-dated backlog; margin expansion as more revenue comes from engineered defense work; and a low-debt balance sheet that limits the downside and leaves room for acquisitions. The main risks we flagged were a forward P/E above 50x, lumpy project-based revenue and heavy reliance on Navy submarine and carrier programs.
I worked on the industry analysis and the financial model, using Excel and Bloomberg data. Our report and presentation placed 2nd overall at the West NY CFA Challenge.
How we valued it
- Discounted cash flowFive-year unlevered DCF, 7.4% WACC, 3% terminal growth
- ScenariosBull $80.29 · Base $72.34 · Bear $60.51
- Trading comparables3.04x EV/Revenue vs. 2.36x peer median
- Precedent transactionsMedian deals at 2.75x EV/Revenue, 12.31x EV/EBITDA
- LBO scenarioBuyout at a 25% premium in the bull case