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Strength Seen in Graham (GHM): Can Its 7.4% Jump Turn into More Strength?

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Graham (GHM) shares soared 7.4% in the last trading session to close at $7.43. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.9% loss over the past four weeks.

The stock surged primarily on optimism surrounding the defense industry, thanks to the Russia-Ukraine war boosting defense spending.

This maker of vacuum and heat-transfer equipment is expected to post quarterly loss of $0.03 per share in its upcoming report, which represents a year-over-year change of +89.3%. Revenues are expected to be $35 million, up 73.6% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Graham, the consensus EPS estimate for the quarter has been revised 700% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on GHM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Graham is a member of the Zacks Manufacturing - General Industrial industry. One other stock in the same industry, Xylem (XYL), finished the last trading session 0.7% higher at $78.75. XYL has returned -9.6% over the past month.

Xylem's consensus EPS estimate for the upcoming report has changed +0.4% over the past month to $0.42. Compared to the company's year-ago EPS, this represents a change of -36.4%. Xylem currently boasts a Zacks Rank of #3 (Hold).

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