Reviewing Graham (NYSE:GHM) and Flowserve (NYSE:FLS)

Graham (NYSE:GHM) and Flowserve (NYSE:FLS) are both industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, valuation, risk, institutional ownership, analyst recommendations, earnings and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Graham	5.83%	12.07%	5.37%
Flowserve	6.12%	17.68%	6.85%

Institutional and Insider Ownership

69.5% of Graham shares are owned by institutional investors. Comparatively, 93.9% of Flowserve shares are owned by institutional investors. 5.7% of Graham shares are owned by company insiders. Comparatively, 0.8% of Flowserve shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Graham has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Flowserve has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Graham and Flowserve, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Graham	0	0	2	1	3.33
Flowserve	0	1	8	1	3.00

Graham currently has a consensus price target of $60.00, suggesting a potential upside of 11.17%. Flowserve has a consensus price target of $63.00, suggesting a potential upside of 13.94%. Given Flowserve’s higher possible upside, analysts clearly believe Flowserve is more favorable than Graham.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Graham	$209.90 million	2.82	$12.23 million	$1.11	48.62
Flowserve	$4.56 billion	1.59	$282.76 million	$2.14	25.84

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

Summary

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

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.

About Flowserve

Flowserve Corporation designs, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Flowserve Pump Division (FPD) and Flow Control Division (FCD) segments. The FPD segment offers custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services; and equipment services, including installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines and in the oil and gas production and process markets. The FCD segment provides engineered and industrial valve and automation systems, including isolation and control valves, actuation, controls, and related equipment; and equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities. This segment's products are used to control, direct, and manage the flow of liquids, gases, and multi-phase fluids. It primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was founded in 1790 and is headquartered in Irving, Texas.