Core Points - Graham Holdings Company will hold a virtual Investor Day on December 9, 2025 [1] - The event will take place from 1:00 p.m. to 2:30 p.m. Eastern Time (ET) [1] - The webcast will include audio and presentation slides discussing the Company's operations and financials [1] - The management team of Graham Holdings will present during the event [1] - Registration for the event is required, and details can be found on the Company's website [1]

Core Insights - Graham (GHM) reported quarterly earnings of $0.31 per share, missing the Zacks Consensus Estimate of $0.33 per share, representing an earnings surprise of -6.06% [1] - The company posted revenues of $66.03 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 12.67% and up from $53.56 million year-over-year [2] - Graham shares have increased approximately 39.7% year-to-date, outperforming the S&P 500's gain of 14.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.27 on revenues of $52.61 million, and for the current fiscal year, it is $1.42 on revenues of $230.61 million [7] - The estimate revisions trend for Graham was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Manufacturing - General Industrial industry, to which Graham belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Core Insights - Graham Corporation reported strong performance in the second quarter of fiscal 2026, with a record backlog of $500.1 million and healthy demand across its end markets, particularly in Defense and Space sectors [3][5][16]. Financial Performance - Net sales increased by 23% to $66.0 million compared to $53.6 million in the same quarter last year [5][7]. - Gross profit rose by 12% to $14.3 million, with a gross profit margin of 21.7%, down 220 basis points from the previous year [5][8]. - Net income per diluted share was $0.28, while adjusted net income per diluted share was $0.31, reflecting no change from the prior year [5][39]. - Adjusted EBITDA increased by 12% to $6.3 million, with an adjusted EBITDA margin of 9.5% [5][39]. Orders and Backlog - Orders for the quarter totaled $83.2 million, resulting in a book-to-bill ratio of 1.3x [5][14]. - The backlog at the end of the quarter was a record $500.1 million, a 23% increase year-over-year, with approximately 85% of the backlog attributed to the Defense industry [5][16]. Market Segments - Sales in the Defense market contributed $9.9 million to growth, driven by project milestones and new programs [7]. - The Energy & Process market saw an 11% increase in sales, primarily due to growth in China, although sales in India decreased due to project timing [7]. Cash Management and Balance Sheet - The company maintained a strong balance sheet with no debt, $20.6 million in cash, and access to $44.7 million under its revolving credit facility [5][11]. - Cash provided by operating activities for the quarter was $13.6 million [10]. Strategic Outlook - The company is focused on high-return initiatives to enhance productivity and profitability, including investments in automation and advanced testing technologies [3][5]. - Full-year fiscal 2026 guidance remains unchanged, with expectations for revenue between $225 million and $235 million and adjusted EBITDA between $22 million and $28 million [19][21].

Core Viewpoint - Graham Corporation has secured multiple orders valued at approximately $22 million from leading Space/Aerospace customers, indicating strong momentum in its commercial space business [1][2]. Group 1: Orders and Revenue - During its fiscal second and third quarters, Graham's subsidiary Barber-Nichols LLC booked new orders for advanced turbomachinery and precision-engineered components from six major players in the commercial space launch market, expected to convert into revenue over the next 12 to 24 months [2]. - The recent orders highlight Graham's expanding role as a critical supplier for next-generation space systems [2]. Group 2: Investment in Capacity - To meet the increasing demand, Graham is investing in production capacity at its Barber-Nichols facility in Colorado, which includes new CNC machining centers and a liquid nitrogen test stand [3]. - These investments complement the construction of a cryogenic test facility near its P3 Technologies subsidiary in Jupiter, Florida, expected to open later this year [3]. Group 3: Market Position and Strategy - The company is experiencing strong momentum from both new and existing customers in the space sector, reflecting its long-term commitment to the industry and key development programs [4]. - Graham's expertise in high-speed rotating equipment and precision manufacturing positions it as a trusted supplier for complex, high-performance systems, reinforcing its strategy to diversify its portfolio across high-growth, technology-driven applications [4].

Group 1 - Wall Street has been underestimating Graham Holdings (GHC), indicating a potential investment opportunity as the stock is considered misunderstood but not mispriced [1] Group 2 - The analyst emphasizes the importance of holding GHC stock rather than selling it, suggesting confidence in its future performance [1]

Core Insights - The London Company Small Cap Strategy reported a 1.9% appreciation in its small-cap portfolio for Q3 2025, underperforming the Russell 2000 Index which gained 12.4% [1] - The investor letter highlighted Graham Holdings Company (NYSE:GHC) as a key stock, noting its strong performance driven by growth in Kaplan Education and Healthcare segments [3] Company Performance - Graham Holdings Company (NYSE:GHC) experienced a one-month return of -5.47% but a 52-week gain of 20.50%, with a closing stock price of $1,036.52 and a market capitalization of $4.522 billion as of November 3, 2025 [2] - The company outperformed benchmarks in Q2 due to solid results and potential easing of broadcast TV M&A regulations, which may enhance future monetization opportunities [3] Investment Sentiment - Despite its potential, Graham Holdings Company (NYSE:GHC) is not among the top 30 most popular stocks among hedge funds, with 20 hedge fund portfolios holding the stock at the end of Q2 2025, unchanged from the previous quarter [4] - There is a belief that certain AI stocks may offer greater upside potential and less downside risk compared to Graham Holdings Company [4]

Core Insights - Graham Holdings Company (GHC) is a diversified conglomerate with operations in education, manufacturing, and healthcare, known for strategic investments and acquisitions that enhance its market presence [1] Financial Performance - On October 29, 2025, GHC reported an earnings per share (EPS) of $27.91, significantly exceeding the estimated EPS of $11.23 [2][6] - The company achieved a revenue of $1.28 billion, surpassing the anticipated $1.22 billion, with a revenue growth of 6% from the previous year's $1.21 billion [2][3][6] Sector Contributions - Revenue growth is primarily driven by increased earnings in the education, manufacturing, and healthcare sectors, which have significantly contributed to the company's overall financial health [3] Valuation Metrics - GHC has a price-to-earnings (P/E) ratio of 6.27, indicating an attractive valuation compared to its earnings [4] - The price-to-sales ratio is 1.27, and the enterprise value to sales ratio is 1.54, suggesting solid market valuation relative to sales [4] Financial Stability - The company has a debt-to-equity ratio of 0.26, indicating a low level of debt compared to equity [5] - A current ratio of 1.32 reflects GHC's ability to cover short-term liabilities, ensuring liquidity [5] - The earnings yield stands at 15.95%, highlighting the company's profitability and strong return on investment for shareholders [5]

Revenue Performance - Revenue for Q3 2025 was $1,278.9 million, a 6% increase from $1,207.2 million in Q3 2024[4] - For the first nine months of 2025, revenue was $3,660.5 million, a 3% increase from $3,545.1 million in the same period of 2024[5] - Overall operating revenues for the company increased by 6% to $1,278,859,000 in Q3 2025 from $1,207,162,000 in Q3 2024[21] - The company reported a 2% increase in total operating revenues for the nine months ended September 30, 2025, reaching $1,334,206,000 compared to $1,283,587,000 in 2024[26] Income and Profitability - Operating income for Q3 2025 was $67.1 million, down 18% from $81.6 million in Q3 2024[4] - Net income attributable to common shares for Q3 2025 was $122.9 million ($27.91 per share), up 70% from $72.5 million ($16.42 per share) in Q3 2024[12] - Operating income for the first nine months of 2025 was $187.4 million, a 31% increase from $143.0 million in the first nine months of 2024[5] - The company reported a total operating income of $67,136,000 in Q3 2025, a decrease of 18% from $81,648,000 in Q3 2024[21] - For the three months ended September 30, 2025, the reported net income attributable to Graham Holdings Company was $126.238 million, compared to $74.506 million for the same period in 2024, representing a 69.5% increase[31] - For the nine months ended September 30, 2025, the reported net income attributable to Graham Holdings Company was $192.382 million, up from $181.018 million in 2024, a growth of 6.8%[32] Cash Flow and Expenses - Adjusted operating cash flow for Q3 2025 was $110.1 million, compared to $126.1 million in Q3 2024[4] - Capital expenditures for Q3 2025 totaled $20.2 million, down from $23.8 million in Q3 2024[4] - Corporate office expenses increased by 25% to $18,290,000 in Q3 2025 compared to $14,657,000 in Q3 2024[21] - The company incurred charges related to non-operating Separation Incentive Programs amounting to $9.185 million for the three months ended September 30, 2025[32] Segment Performance - Operating revenues for the Education segment increased by 8% to $472,662,000 in Q3 2025 from $438,090,000 in Q3 2024[21] - Healthcare segment revenues rose by 34% to $208,415,000 in Q3 2025 compared to $155,413,000 in Q3 2024[21] - Television broadcasting revenues decreased by 28% to $105,087,000 in Q3 2025 from $145,422,000 in Q3 2024[21] - Operating income for the Education segment increased by 41% to $49,052,000 in Q3 2025 from $34,890,000 in Q3 2024[21] - Operating income for the Automotive segment reported a 1% decrease in revenues to $285,228,000 in Q3 2025 from $289,392,000 in Q3 2024[21] Marketable Securities and Other Gains - The company recognized net gains on marketable equity securities of $84.8 million in Q3 2025, compared to $30.5 million in Q3 2024[10] - The company reported net gains on marketable equity securities of $(84.768) million for the three months ended September 30, 2025, compared to $(22.688) million in 2024, showing a significant decline[31] Debt and Borrowings - As of September 30, 2025, the company had $731.9 million in borrowings at an average interest rate of 5.9%[9] - Interest expense related to the fair value adjustment of the mandatorily redeemable noncontrolling interest was $68.278 million for the three months ended September 30, 2025[32] Adjusted Income Metrics - The adjusted net income (non-GAAP) for the same period in 2025 was $61.992 million, while it was $76.144 million in 2024, indicating a decrease of 18.5%[31] - The adjusted net income (non-GAAP) for the nine months ended September 30, 2025, was $176.090 million, slightly down from $183.460 million in 2024, a decrease of 4.1%[32] - The diluted income per common share, as reported, was $27.91 for 2025, compared to $16.42 for 2024, reflecting a 70.1% increase[31] - The diluted income per common share, adjusted (non-GAAP), was $40.05 for 2025, compared to $41.20 for 2024, indicating a decline of 2.8%[32]

Financial Performance - The Company reported net income of $122.9 million ($27.91 per share) for Q3 2025, up from $72.5 million ($16.42 per share) in Q3 2024, representing a 69.5% increase in net income [152]. - Revenue for Q3 2025 was $1,278.9 million, a 6% increase from $1,207.2 million in Q3 2024, driven by growth in education, manufacturing, and healthcare [152]. - For the first nine months of 2025, net income was $183.6 million ($41.75 per share), compared to $175.8 million ($39.49 per share) for the same period in 2024, reflecting a 4.1% increase [153]. - The Company reported operating income of $67.1 million for Q3 2025, down from $81.6 million in Q3 2024, attributed to declines in television broadcasting and automotive sectors [152]. - For the first nine months of 2025, revenue was $3,660.5 million, a 3% increase from $3,545.1 million in the same period of 2024, with growth in education, manufacturing, and healthcare [155]. Segment Performance - Education division revenue for Q3 2025 was $472.7 million, up 8% from $438.1 million in Q3 2024, with operating income increasing to $49.1 million from $34.9 million [156]. - Kaplan International revenue increased by 6% in Q3 2025, with operating income rising to $28.9 million from $25.5 million in Q3 2024 [159]. - Higher Education revenue increased by 8% for both Q3 and the first nine months of 2025, primarily due to a rise in fees from Purdue Global [160]. - Manufacturing revenue increased by 30% in Q3 2025 and 6% for the first nine months, driven by Hoover, Dekko, and Joyce, despite lower revenues at Forney [168]. - Healthcare revenue rose by 34% in Q3 2025 and 36% for the first nine months, largely due to growth at CSI and home health services [170]. - Automotive revenue decreased by 1% in Q3 2025 and 6% for the first nine months, primarily due to declines in new and used vehicle sales [175]. Non-Operating Income and Expenses - The Company experienced a net non-operating gain of $17.1 million from earnings and impairment of equity and cost method investments in Q3 2025 [154]. - The Company recorded equity in earnings of $2.9 million from home health and hospice joint ventures in Q3 2025 [172]. - The Company recorded equity in earnings of affiliates of $15.8 million for Q3 2025, compared to losses of $13.4 million in Q3 2024, including a gain of $18.6 million from Intersection [188]. - Net interest expense decreased to $15.7 million in Q3 2025 from $23.6 million in Q3 2024, reflecting lower interest rates on variable debt [190]. - Non-operating pension and postretirement benefit income was $31.0 million for Q3 2025, down from $38.3 million in Q3 2024 [194]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased by $70.0 million during the first nine months of 2025, primarily due to capital expenditures and business acquisitions [207]. - Net cash provided by operating activities for the first nine months of 2025 was $318.9 million, an increase from $290.7 million in 2024, primarily driven by higher net income [217][218]. - The Company used $98.4 million in investing activities during the first nine months of 2025, compared to $35.7 million in 2024, with capital expenditures estimated to be between $80 million and $90 million in 2025 [218]. Debt and Financial Obligations - As of September 30, 2025, the Company had $731.9 million in borrowings outstanding at an average interest rate of 5.9% [193]. - The Company had working capital of $549.3 million as of September 30, 2025, down from $898.8 million at December 31, 2024 [211]. - The Company incurred net interest expense of $111.3 million for the first nine months of 2025, down from $130.0 million for the same period in 2024 [213]. - The Company settled a significant portion of the mandatorily redeemable noncontrolling interest for a total of $205 million, consisting of approximately $186.25 million in cash and $18.75 million in Class B common stock [214]. - The Company recorded a $66.2 million increase to the mandatorily redeemable noncontrolling interest obligation as interest expense in Q1 2025, with a remaining obligation of $22.2 million as of September 30, 2025 [215]. - The Company had $67.2 million outstanding under its $300 million revolving credit facility as of September 30, 2025, and expects to meet its financial requirements for the next 12 months [216]. Acquisitions and Investments - The Company acquired Arconic Architectural Products, LLC for a significant portion funded by $107.4 million in net pension obligations [167]. - In August 2025, CSI purchased Pine Drug Holdings, LLC, with operations expected to commence in Q4 2025 [171]. - The Company invested an additional $29.3 million in its equity affiliate Intersection in September 2025 [223]. Dividends and Stock Repurchase - The Company paid dividends of $23.5 million in the first nine months of 2025, with a quarterly dividend rate of $1.80 per share, up from $1.72 in 2024 [227]. - The Company repurchased 3,978 shares of Class B common stock at a cost of approximately $3.5 million during the first nine months of 2025 [228]. Market Risks - The Company is exposed to market risks including equity price risk, interest rate risk, and foreign exchange rate risk [231].

Group 1 - The core investment style of the company focuses on providing actionable and clear ideas derived from independent research [1] - The company claims to have assisted its members in outperforming the S&P 500 while avoiding significant drawdowns during periods of extreme volatility in both equity and bond markets [1] - The service offers at least one in-depth article per week on investment ideas, promoting a trial membership to evaluate its effectiveness [1]