Thermon Group Holdings (NYSE: THR) and Graham Corporation (NYSE:GHM) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, earnings, dividends, profitabiliy, analyst recommendations, valuation and risk.

Dividends

Graham Corporation pays an annual dividend of $0.36 per share and has a dividend yield of 1.8%. Thermon Group Holdings does not pay a dividend. Graham Corporation pays out 70.6% of its earnings in the form of a dividend. Graham Corporation has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a summary of current recommendations for Thermon Group Holdings and Graham Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Thermon Group Holdings 0 2 2 0 2.50
Graham Corporation 0 0 1 0 3.00

Thermon Group Holdings presently has a consensus target price of $21.00, suggesting a potential upside of 14.94%. Graham Corporation has a consensus target price of $30.00, suggesting a potential upside of 49.70%. Given Graham Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Graham Corporation is more favorable than Thermon Group Holdings.

Valuation and Earnings

This table compares Thermon Group Holdings and Graham Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Thermon Group Holdings $264.13 million 2.24 $39.78 million $0.45 40.60
Graham Corporation $91.77 million 2.13 $9.63 million $0.51 39.29

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

Institutional and Insider Ownership

75.1% of Graham Corporation shares are held by institutional investors. 1.2% of Thermon Group Holdings shares are held by company insiders. Comparatively, 3.3% of Graham Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Thermon Group Holdings and Graham Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Thermon Group Holdings 5.54% 4.60% 3.11%
Graham Corporation 5.47% 4.93% 3.68%

Volatility and Risk

Thermon Group Holdings has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Graham Corporation has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Summary

Graham Corporation beats Thermon Group Holdings on 10 of the 17 factors compared between the two stocks.

Thermon Group Holdings Company Profile

Thermon Group Holdings, Inc. is a provider of engineered thermal solutions for process industries. The Company operates through four segments based on four geographic countries or regions: United States, Canada, Europe and Asia. Its product portfolio includes self-regulating and power limiting heating cables, which change heat output as pipe temperature changes, as well as constant wattage heating cables; mineral insulated (MI) cable; skin effect trace heater; heat traced tube bundles for environmental gas sampling systems; heat transfer compounds and steam tracers for steam tracing solutions; control and monitoring systems for electric tracing of pipes, tanks, hoppers and instrument sampling systems; turnkey solutions that provide solutions for heat tracing, including design, optimization, installation and ongoing maintenance; products and services, such as heating, sensing, monitoring, controlling and calibration tools, and temporary electric power distribution and lighting products.

Graham Corporation Company Profile

Graham Corporation designs, manufactures and sells critical equipment for the energy, defense and chemical/petrochemical industries. The Company designs and manufactures custom-engineered ejectors, vacuum pumping systems, surface condensers and vacuum systems. It is a nuclear code accredited fabrication and specialty machining company. It supplies components used inside reactor vessels and outside containment vessels of nuclear power facilities. Its equipment is found in applications, such as metal refining, pulp and paper processing, water heating, refrigeration, desalination, food processing, pharmaceutical, heating, ventilating and air conditioning. For the defense industry, its equipment is used in nuclear propulsion power systems for the United States Navy. The Company’s products are used in a range of industrial process applications in energy markets, including petroleum refining, defense, chemical and petrochemical processing, power generation/alternative energy and other.

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