Graham (NYSE:GHM) and Graco (NYSE:GGG) Head to Head Review

Graham (NYSE:GHM) and Graco (NYSE:GGG) are both industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.

Risk and Volatility

Graham has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Graco has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Institutional and Insider Ownership

69.5% of Graham shares are held by institutional investors. Comparatively, 93.9% of Graco shares are held by institutional investors. 6.0% of Graham shares are held by insiders. Comparatively, 2.2% of Graco shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Graham and Graco, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graham	0	2	3	1	2.83
Graco	0	3	4	0	2.57

Graham presently has a consensus target price of $81.67, indicating a potential downside of 14.05%. Graco has a consensus target price of $96.50, indicating a potential upside of 12.98%. Given Graco’s higher possible upside, analysts plainly believe Graco is more favorable than Graham.

Earnings and Valuation

This table compares Graham and Graco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graham	$209.90 million	5.01	$12.23 million	$1.35	70.38
Graco	$2.24 billion	6.33	$521.84 million	$3.09	27.64

Graco has higher revenue and earnings than Graham. Graco is trading at a lower price-to-earnings ratio than Graham, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Graham and Graco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Graham	6.28%	13.26%	6.07%
Graco	23.33%	19.49%	15.89%

Summary

Graco beats Graham on 11 of the 15 factors compared between the two stocks.

About Graham

Graham Corporation, together with its subsidiaries, designs and manufactures fluid, power, heat transfer, and vacuum equipment for chemical and petrochemical processing, defense, space, petroleum refining, cryogenic, energy, and other industries. It offers power plant systems, including ejectors and surface condensers; torpedo ejection, propulsion, and power systems, such as turbines, alternators, regulators, pumps, and blowers; and thermal management systems comprising pumps, blowers, and drive electronics for defense sector. The company also provides rocket propulsion systems consisting of turbopumps and fuel pumps; cooling systems, which include pumps, compressors, fans, and blowers; and life support systems that comprise fans, pumps, and blowers for space industry. In addition, it offers heat transfer and vacuum systems, including ejectors, process and surface condensers, liquid ring pumps, heat exchangers, and nozzles; power generation systems, such as turbines, generators, compressors, and pumps; and thermal management systems comprising pumps, blowers, and electronics for energy sector. Further, the company offers heat transfer and vacuum systems consisting of ejectors, process and surface condensers, liquid ring pumps, heat exchangers, and nozzles for chemical and petrochemical processing industry. The company also services and sells spare parts for its equipment. It sells its products directly in the United States, the Middle East, Canada, Asia, South America, and internationally. Graham Corporation was founded in 1936 and is headquartered in Batavia, New York.

About Graco

Graco Inc. designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide. The Contractor segment offers sprayers to apply paint to walls and other structures; two-component proportioning systems that are used to spray polyurethane foam and polyurea coatings; and viscous coatings to roofs, as well as markings on roads, parking lots, athletic fields, and floors. The Industrial segment provides liquid finishing equipment, paint circulating and supply pumps, paint circulating advanced control systems, plural component coating proportioners, and accessories and spare parts; equipment that pumps, meters, mixes and dispenses sealant, adhesive, and composite materials; and gel-coat equipment, chop and wet-out systems, resin transfer molding systems and applicators, and precision dispensing solutions. It also offers powder finishing products to coat powder finishing on metals under the Gema and SAT brands. The Process segment provides pumps to move and dispense chemicals, water, wastewater, petroleum, food, lubricants, and other fluids; pressure valves used in the oil and natural gas industry, other industrial processes, and research facilities; and chemical injection pumping solutions for injection of chemicals into producing oil wells and pipelines. It also supplies pumps, hose reels, meters, valves, and accessories for fast oil change facilities, service garages, fleet service centers, automobile dealerships, auto parts stores, truck builders, and heavy equipment service centers; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators in industrial and commercial equipment, compressors, turbines, and on- and off-road vehicles. It sells its products through distributors, original equipment manufacturers, and home center channels, as well as to end-users. The company was incorporated in 1926 and is headquartered in Minneapolis, Minnesota.