Graham Holdings is a diversified education and media company whose principal operations include educational services, television broadcasting, cable systems and online services, print and local television news. Its education services operates in three segments: Kaplan Higher Education, Kaplan Test Preparation and Kaplan International. The company was founded in 1947 and is based in Washington, D.C.
GHC Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Graham Holdings Co with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Graham Holdings Co ranked in the 56th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 71.5%. As for the metrics that stood out in our discounted cash flow analysis of Graham Holdings Co, consider:
Graham Holdings Co's weighted average cost of capital (WACC) is 7%; for context, that number is higher than merely 8.57% of tickers in our DCF set.
Graham Holdings Co's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 8.77. This coverage rate is greater than that of 75.45% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Consumer Defensive), Graham Holdings Co has a reliance on debt greater than 60.52% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Defensive that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as GHC, try CCEP, STZ, DG, HLF, and TGT.
When stock can be bought below a business's value, it is probably the best use of cash. - Warren Buffett The small-cap universe is full of hidden gems than are getting buried under the weight of the overall market and Graham Holdings Company (GHC) is one of those gems. "Small-caps...
Michael A. Gayed, CFA on Seeking Alpha | September 28, 2020
It is now my pleasure to introduce your host, Chris Gordon, Investor Relations for Graham Corporation. Thank you, Mr. Gordon, you may begin. On the call with me today are Jim Lines, our President and Chief Executive Officer; Jeff Glajch, our Chief Financial Officer; and Alan Smith, Vice President and General Manager of our Batavia, New York facility.
It has been good to recently identify some new double-nets (companies trading at between one and two times net current asset value, or NCAV) as the ranks that comprise one of my favorite small-value hunting grounds have been quite small in recent years. Graham Corp. , which makes vacuum and heat transfer equipment, currently trades at 1.64x NCAV. Shares have been hammered year to date (down 45%) due to the economic slowdown, but the company put up better-than-expected fourth-quarter numbers in June; it reported earnings per share of six cents, well ahead of the consensus expectation of a loss of 17 cents.