Graham Holdings Co (GHC) stock analysis

P/E below its 5-year median

Graham's P/E of 10.7 is below its own 5-year median of 13.6.

P/E below the industry

Graham's P/E of 10.7 is below the Services-educational services median of 13.0.

EV/EBITDA below its 5-year median

Graham's EV/EBITDA of 21.1 is below its 5-year median of 33.0.

P/B below the industry

Graham's price-to-book of 1.06 is below the Services-educational services median of 2.30.

Trading below fair value

The share price of $1216.96 is below our fair value estimate of $1335.40.

Margin of safety under 20%

The price is 8.9% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 7.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 68.9% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -32.5% over the last twelve months, against a 5-year average of -0.5% a year.

Growing faster than the industry

Revenue grew 4.3% over the last twelve months; the Services-educational services median is 2.7%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

This company does not report gross profit.

Return on equity under 15%

Return on equity was 10.7% over the last twelve months and averaged 7.9% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 4.2%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Graham's return on equity of 10.7% is above the Services-educational services median of 0.6%.

Earnings shrank over 5 years

Net income shrank 0.5% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 9.7% over the last twelve months, against a 5-year average of 7.7%.

Net margin above the industry

Graham's net margin of 9.7% is above the Services-educational services median of -3.7%.

Low debt

Debt is 17.9% of shareholders' equity, under the 40% we consider low.

Debt rising against equity

Debt to equity rose from 13.6% five years ago to 17.9%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 36.2% of total debt.

Interest well covered

Operating income covers interest expense 5.4 times.

Short-term assets cover short-term debts

Current assets are 1.76 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.22; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Graham paid dividends worth 0.6% of the share price over the last twelve months.

Yield below Treasuries

The 0.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Graham yields 0.6%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.