Analyzing Graham (NYSE:GHM) and Proto Labs (NYSE:PRLB)

Proto Labs (NYSE:PRLB) and Graham (NYSE:GHM) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Proto Labs	5.44%	4.80%	4.22%
Graham	4.53%	11.09%	5.17%

Risk and Volatility

Proto Labs has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500. Comparatively, Graham has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Insider & Institutional Ownership

84.5% of Proto Labs shares are owned by institutional investors. Comparatively, 69.5% of Graham shares are owned by institutional investors. 1.3% of Proto Labs shares are owned by company insiders. Comparatively, 2.4% of Graham shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Proto Labs and Graham”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Proto Labs	$560.54 million	3.82	$21.24 million	$1.25	71.56
Graham	$245.29 million	4.17	$12.50 million	$1.04	83.75

Proto Labs has higher revenue and earnings than Graham. Proto Labs 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 summary of current recommendations for Proto Labs and Graham, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Proto Labs	0	0	3	1	3.25
Graham	0	3	2	0	2.40

Proto Labs presently has a consensus price target of $89.00, indicating a potential downside of 0.50%. Graham has a consensus price target of $132.50, indicating a potential upside of 52.12%. Given Graham’s higher probable upside, analysts clearly believe Graham is more favorable than Proto Labs.

Summary

Proto Labs beats Graham on 9 of the 15 factors compared between the two stocks.

About Proto Labs

Proto Labs, Inc., together with its subsidiaries, operates as a digital manufacturer of custom parts in the United States and Europe. The company offers injection molding; computer numerical control machining; three-dimensional printing; and sheet metal fabrication products. It serves developers and engineers, who use 3D computer-aided design software to design products across a range of end-markets. Proto Labs, Inc. was incorporated in 1999 and is headquartered in Maple Plain, Minnesota.

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.