What Happened?

Shares of industrial fluid and energy systems manufacturer Graham Corporation (NYSE: GHM) jumped 19.7% in the afternoon session after the company reported strong third-quarter earnings which beat analysts' revenue, EBITDA, and EPS expectations. 

Sales growth was driven by increased demand in the defense and refining markets, as well as the successful execution of new projects. 

Profitability was strengthened by significant margin improvements, with gross margin increasing to 23.9%, thanks to higher project volumes and a shift toward higher-margin projects​. 

Given the solid performance during the quarter, the company was able to reaffirm its full-year sales outlook. Its EBITDA guidance also exceeded Wall Street's estimates. Zooming out, we think this quarter was a very good one. 

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What The Market Is Telling Us

Graham Corporation’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for Graham Corporation and indicate this news significantly impacted the market’s perception of the business.

Graham Corporation is up 103% since the beginning of the year, and at $39.07 per share, has set a new 52-week high. Investors who bought $1,000 worth of Graham Corporation’s shares 5 years ago would now be looking at an investment worth $1,711.

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