Graham Corp (GHM) is a BUY

July 12, 2008

GHM has a current Value of $99.01 per share. Therefore, it is undervalued compared to its Price of $78.85 per share . Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease
(Growth to P/E Ratio): GPE is another popular measure of stock valuation. It compares earnings growth rate to P/E ratio. GHM has a GPE rating of 1.55 . High growth stocks are believed to be able to justify high P/E ratios. A stock is commonly considered to be undervalued when GPE is greater than 1.00 and overvalued when GPE is below 1.00. Unfortunately, this rule of thumb does not take into account the effect of interest rates on P/E ratios. The operative GPE ratio of 1.00 is valid when and only when interest rates equal 10%. With long-term interest rates currently at 5.99%, the operative GPE ratio is 0.36. Therefore, GHM may be considered to be undervalued

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