Contrasting Eastern (NASDAQ:EML) & Graham (NYSE:GHM)

Eastern (NASDAQ:EML) and Graham (NYSE:GHM) are both small-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, analyst recommendations, risk, valuation, institutional ownership and earnings.

Earnings and Valuation

This table compares Eastern and Graham”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eastern	$248.97 million	0.58	$7.13 million	$1.34	18.01
Graham	$245.29 million	3.27	$12.50 million	$1.04	65.71

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

Analyst Recommendations

This is a breakdown of recent recommendations for Eastern and Graham, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eastern	0	2	0	0	2.00
Graham	0	2	3	0	2.60

Graham has a consensus price target of $123.33, suggesting a potential upside of 80.48%. Given Graham’s stronger consensus rating and higher possible upside, analysts clearly believe Graham is more favorable than Eastern.

Insider & Institutional Ownership

77.0% of Eastern shares are owned by institutional investors. Comparatively, 69.5% of Graham shares are owned by institutional investors. 18.4% of Eastern shares are owned by insiders. Comparatively, 2.4% of Graham shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Eastern	3.44%	3.38%	1.89%
Graham	4.53%	11.09%	5.17%

Volatility & Risk

Eastern has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Graham has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500.

Summary

Graham beats Eastern on 10 of the 14 factors compared between the two stocks.

About Eastern

The Eastern Company designs, manufactures, and sells engineered solutions to industrial markets in the United States and internationally. The company offers turnkey returnable packaging solutions, which are used in the assembly processes of vehicles, aircraft, and durable goods, as well as in production processes of plastic packaging products, packaged consumer goods, and pharmaceuticals; designs and manufactures blow mold tools and injection blow mold tooling products, and 2-step stretch blow molds and related components for the stretch blow molding industry; and supplies blow molds and change parts to the food, beverage, healthcare, and chemical industries. It also provides rotary latches, compression latches, draw latches, hinges, camlocks, key switches, padlocks, and handles; and development and program management services for custom electromechanical and mechanical systems for original equipment manufacturers (OEMs) and customer applications. In addition, the company designs and manufactures proprietary vision technology for OEMs and aftermarket applications, as well as offers aftermarket components to the heavy- and medium-duty truck, motorhome, and bus markets. The Eastern Company was founded in 1858 and is based in Shelton, Connecticut.

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.