Winners And Losers Of Q3: Graham Corporation (NYSE:GHM) Vs The Rest Of The Engineered Components and Systems Stocks

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Graham Corporation (NYSE:GHM) and the rest of the engineered components and systems stocks fared in Q3.

Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 12 engineered components and systems stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.5% while next quarter’s revenue guidance was 0.5% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10.8% since the latest earnings results.

Graham Corporation (NYSE:GHM)

Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.

Graham Corporation reported revenues of $66.03 million, up 23.3% year on year. This print exceeded analysts’ expectations by 14.7%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ EBITDA estimates.

Graham’s President and Chief Executive Officer, Matthew J. Malone stated, “I am pleased with our performance through the first half of the fiscal year. Our team continues to execute well across all business lines, driving broad-based growth supported by a record $500.1 million backlog. Demand across our end markets remains healthy as our Defense and Space markets continue to experience robust activity, and the Energy & Process market remains resilient. These trends are underscored by approximately $14.8 million of new Space orders secured and a $25.5 million follow-on order for the MK48 Torpedo program during the quarter, reinforcing our position as a trusted partner on critical platforms.”

Graham Corporation pulled off the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 10% since reporting and currently trades at $55.83.

Read why we think that Graham Corporation is one of the best engineered components and systems stocks, our full report is free.

Best Q3: Timken (NYSE:TKR)

Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.

Timken reported revenues of $1.16 billion, up 2.7% year on year, outperforming analysts’ expectations by 3.6%. The business had an exceptional quarter with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ revenue estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.1% since reporting. It currently trades at $74.84.

Is now the time to buy Timken? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Park-Ohio (NASDAQ:PKOH)

Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.

Park-Ohio reported revenues of $398.6 million, down 4.5% year on year, falling short of analysts’ expectations by 4.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.

As expected, the stock is down 9.7% since the results and currently trades at $19.03.

Read our full analysis of Park-Ohio’s results here.

Mayville Engineering (NYSE:MEC)

Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE:MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.

Mayville Engineering reported revenues of $144.3 million, up 6.6% year on year. This result beat analysts’ expectations by 2.8%. It was an exceptional quarter as it also recorded a beat of analysts’ EPS and adjusted operating income estimates.

The stock is down 16.9% since reporting and currently trades at $15.00.

Read our full, actionable report on Mayville Engineering here, it’s free for active Edge members.

Enpro (NYSE:NPO)

Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.

Enpro reported revenues of $286.6 million, up 9.9% year on year. This print topped analysts’ expectations by 3.6%. Overall, it was a strong quarter as it also produced a solid beat of analysts’ revenue estimates and full-year EBITDA guidance slightly topping analysts’ expectations.

The stock is down 10.3% since reporting and currently trades at $209.72.

Read our full, actionable report on Enpro here, it’s free for active Edge members.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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