Breaking Down Graham Holdings Company (GHC) Financial Health: Key Insights for Investors

You're looking at Graham Holdings Company (GHC) and seeing a classic conglomerate puzzle: strong growth engines masking some real drag, which is exactly where an analyst needs to focus. For the third quarter of 2025, the company reported revenue of $1.28 billion, a solid beat, and a massive jump in net income attributable to common shares to $122.9 million, or $27.91 per share. But here's the quick math: that net income surge was heavily supported by non-operating gains, specifically an $84.8 million gain on marketable equity securities.

The core business story is more nuanced, and that's the risk/opportunity map you need to act on. While the Education segment's operating income soared 41% and Healthcare's jumped 47%, the Television Broadcasting and Automotive divisions saw declines, pushing overall operating income down to $67.1 million for the quarter. So, while the full-year 2025 analyst projection for revenue sits at a healthy $4.92 billion, the near-term action is figuring out how management will fix those underperforming assets or if they'll defintely double down on the high-growth, high-margin areas like education. You need to understand the balance sheet strength-over $1.24 billion in cash and marketable securities as of September 30, 2025-and what that capital is earmarked for next.

Revenue Analysis

You need to see where the money is actually coming from at Graham Holdings Company (GHC), especially as the business mix shifts. The top-line revenue for the trailing twelve months (TTM) ending September 30, 2025, hit roughly $4.91 billion, showing a year-over-year growth rate of 4.13%. That growth is modest, but it hides a massive internal re-shuffle, which is the real story here.

The company's primary revenue sources are a diversified portfolio of businesses, a strategy that helps cushion against sector-specific downturns. The segments are Education, Television Broadcasting, Manufacturing, Healthcare, and Automotive. What's clear from the 2025 quarterly results is that Education and Healthcare are the heavy lifters right now, while the traditional media segments are struggling. It's a tale of two companies.

Here's the quick math on segment contribution from the Q2 2025 results, where total revenue was $1.22 billion:

• Education (Kaplan International, Higher Education, etc.): Contributed approximately $436.8 million, or about 35.8% of the quarter's total revenue.
• Healthcare: Contributed about $202.2 million, or around 16.6%.
• The remaining 47.6% comes from Television Broadcasting, Manufacturing, Automotive, and Other segments.

The year-over-year revenue growth rate has been inconsistent but positive in 2025, starting with a small 1% increase in Q1, accelerating to 3% in Q2, and then a 6% jump in Q3, where quarterly revenue reached $1.28 billion. This acceleration is defintely driven by the high-growth segments. You have to look at the segment-specific trends to understand the quality of this growth.

Analysis of any significant changes in revenue streams is crucial. The Education and Healthcare segments are driving the entire top-line increase, and their performance is stellar. In Q3 2025, for instance, the Healthcare segment's revenue surged 34% year-over-year. The Education segment also delivered robust performance, with operating income up 41% in Q3 2025. This is where GHC is finding its new growth engine.

Conversely, the legacy businesses are facing headwinds. Television Broadcasting revenue was down a significant 28% in Q3 2025, and the Automotive segment saw a 1% decline in the same quarter. These declines are a direct consequence of market shifts like cord-cutting and fluctuating auto sales, and they are actively dragging down the consolidated operating income. This is the core risk for GHC investors, but the growth in Education and Healthcare is currently outpacing those declines, a key insight for Breaking Down Graham Holdings Company (GHC) Financial Health: Key Insights for Investors.

To summarize the segment-level changes for the first half of 2025:

What this table shows is a clear divergence: the Education and Healthcare units are consistently delivering double-digit or near-double-digit growth, while the Broadcasting and Automotive segments are consistently shrinking, creating a structural challenge for management to address. The Education and Healthcare growth is not a one-off event.

Profitability Metrics

You're looking for a clear read on Graham Holdings Company's (GHC) financial engine, and the Q3 2025 numbers show a classic diversified holding company story: strong bottom-line growth masking core operating pressure. The headline $122.9 million net income for Q3 2025 looks fantastic, but you need to look beneath the surface to see where the real profits are coming from.

Here's the quick math on GHC's core profitability for the trailing twelve months (TTM) ending Q3 2025, compared to the industry average for Conglomerates:

The TTM Gross Profit Margin of 30.32% is slightly below the Conglomerates average of 33.7%, which makes sense given GHC's mix of capital-intensive manufacturing and lower-margin automotive businesses. The TTM Operating Profit Margin of 7.58% is respectable, but this is where the operational efficiency story gets complicated.

Operational Efficiency and Margin Trends

The trend in GHC's operating profitability is a near-term concern. Operating Income for Q3 2025 actually declined 18% year-over-year to $67.1 million, dragging the quarterly Operating Profit Margin down to around 5.25%. This drop points to rising costs or revenue pressure in certain segments.

To be fair, the decline is not uniform across the board. GHC's strength is in its diversified portfolio, which acts as a hedge. The core operational efficiency is being driven by the growth segments, which are successfully offsetting the underperformers:

• Education segment operating income rose 41% year-over-year in Q3 2025.
• Healthcare segment operating income surged 47% year-over-year in Q3 2025.
• The drag is coming from the Television Broadcasting and Automotive segments, which pressured the overall operating income.

The Gross Margin trend shows GHC is holding steady, with the TTM margin at 30.32%. This suggests cost of goods sold (COGS) management is stable, but the pressure is coming from selling, general, and administrative (SG&A) expenses, or simply falling revenue in the struggling units, which hits the Operating Margin.

Net Profit Margin: The Portfolio Effect

The Net Profit Margin tells a very different story, and it's why GHC's stock narrative has been strong. The current net profit margin of 14.8% is significantly higher than the Conglomerates average of 2.3%. This dramatic outperformance is not from core business operations alone. The Q3 2025 net income of $122.9 million was heavily boosted by $84.8 million in net gains on marketable equity securities.

This is a critical distinction for investors. The 14.8% net margin reflects management's excellent capital allocation and investment returns (non-operating income), not just the profitability of the day-to-day businesses. That's an important factor, but you defintely need to separate the two. A high net margin driven by non-operating gains suggests a strong investment strategy but a weaker operational core, which is exactly what the declining Operating Income suggests. You can read more about the strategic direction in the company's Mission Statement, Vision, & Core Values of Graham Holdings Company (GHC).

Debt vs. Equity Structure

Graham Holdings Company (GHC) maintains a conservative and well-managed capital structure, preferring to fund its operations and strategic growth with a significant base of equity, which is clearly reflected in its low financial leverage.

As of September 2025, the company's Debt-to-Equity (D/E) ratio stood at approximately 0.26, or 29.1%. To put that in perspective, this is right in line with its 13-year historical median of 0.27. This low ratio signals a preference for equity funding over debt, meaning GHC has roughly 26 cents of debt for every dollar of shareholder equity. Honestly, that's a defintely prudent approach for a diversified holding company.

Here's the quick math on the balance sheet as of March 31, 2025, before the most recent refinancing activity:

• Total Common Stockholders' Equity: $4,294.415 million
• Current Portion of Long-Term Debt: $149.178 million
• Long-Term Debt: $715.457 million

The total debt load is manageable, especially when considering the significant cash and marketable equity securities the company holds, which totaled $1,114.7 million at the end of the first quarter of 2025.

The company's strategy is not to avoid debt entirely, but to use it strategically and keep it long-term. This is evident in the major refinancing activity that occurred in November 2025, which focused on extending the debt maturity profile and optimizing interest costs.

On November 13, 2025, Graham Holdings Company priced a private offering of $500 million in senior unsecured notes due in 2033, carrying a coupon rate of 5.625%. This move is a textbook example of proactive balance sheet management.

The proceeds from these new notes, combined with borrowings from an expanded revolving credit facility, are earmarked to redeem the existing 5.750% notes due 2026 and repay a $150 million term loan. This simple action swaps a near-term maturity for a much longer-term one, reducing immediate refinancing risk. Plus, the company is increasing its revolving credit facility capacity to $400 million from $300 million, boosting liquidity.

The credit rating agencies view this capital structure as stable. S&P Global Ratings assigned a 'BB' issue-level rating to the proposed $500 million notes, maintaining the company's overall 'BB' issuer credit rating with a stable outlook. Moody's also has a Ba1 long-term rating. This non-investment grade rating is common for diversified holding companies, but the stable outlook confirms the market's confidence in GHC's ability to service its debt. The company is clearly balancing its debt financing with its strong equity base, using debt only to fund growth and manage its maturity schedule, not to prop up a weak balance sheet.

For a deeper dive into the company's overall financial picture, you can check out the full post at Breaking Down Graham Holdings Company (GHC) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Graham Holdings Company (GHC) can cover its near-term obligations, and the quick answer is yes, with a solid liquidity profile anchored by substantial marketable securities. As of the third quarter of 2025, the company's liquidity ratios are healthy, indicating a strong ability to meet its current liabilities without stress.

The core liquidity metrics-the Current Ratio and Quick Ratio (Acid-Test Ratio)-demonstrate a comfortable position. The Current Ratio, which measures current assets against current liabilities, stands at a respectable 1.32 as of Q3 2025. This means GHC holds $1.32 in short-term assets for every dollar in short-term debt. The Quick Ratio, which excludes less-liquid assets like inventories, is 1.03, showing GHC can cover all current liabilities with just its cash, receivables, and marketable securities.

Working capital-the difference between current assets and current liabilities-is a positive $549.344 million in Q3 2025, which is a significant buffer. This trend is supported by an increase in highly-liquid assets, including $190.822 million in cash and cash equivalents and over $1.005 billion in marketable equity securities. The positive change in working capital, reported at $110 million for the trailing twelve months ending September 2025, confirms a continued inflow of cash from operations that is outpacing short-term liability growth. For a deeper look at the long-term strategic foundation supporting this health, review the Mission Statement, Vision, & Core Values of Graham Holdings Company (GHC).

The cash flow statement overview for 2025 shows a healthy engine. Adjusted operating cash flow (OCF) was strong, hitting $88.0 million in Q1 2025 and $110.1 million in Q3 2025, despite some segment-specific headwinds in television broadcasting and automotive. This strong OCF, coupled with relatively low capital expenditures of $14.1 million in Q1 2025, resulted in a robust Free Cash Flow (FCF) of $161.75 million in Q3 2025. That's a lot of cash left over after maintaining the business.

Financing activities did see a notable cash outflow of $186.25 million in Q1 2025, used to settle a portion of the mandatorily redeemable noncontrolling interest. This is a strategic capital allocation decision to simplify the ownership structure, not a liquidity concern. The significant cash and marketable securities balance means GHC has the financial flexibility to execute such strategic moves while defintely maintaining its operational stability.

• Monitor the OCF trend, especially with segment volatility.
• The high Quick Ratio suggests minimal near-term liquidity risk.
• The large marketable securities portfolio acts as a significant liquidity reserve.

Valuation Analysis

The short answer is that Graham Holdings Company (GHC) appears undervalued based on core earnings multiples, but the market's low analyst coverage and the stock's recent run-up suggest caution is defintely warranted. The company's diversified business model-spanning education, media, and manufacturing-is generating significant cash flow, which the market doesn't seem to be fully pricing in yet.

Here's the quick math on why the stock looks cheap: As of November 2025, Graham Holdings Company's trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio is hovering around 6.3x. To be fair, that's a massive discount compared to the US Consumer Services industry average of roughly 16.0x. This low P/E often signals that the market is either underestimating future earnings or sees significant, hidden risks. It's a classic value trap indicator, but in this case, the underlying businesses seem relatively stable.

Also, the Price-to-Book (P/B) ratio is near parity at approximately 0.90, which means you are buying the company for less than the value of its net assets on the balance sheet. Plus, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is a very attractive 3.7x. This low multiple suggests the company is cheap relative to its operating cash flow before debt and depreciation. A healthy, growing company with an EV/EBITDA this low is usually a strong signal of undervaluation.

• P/E Ratio (TTM): 6.3x (Suggests undervaluation)
• P/B Ratio: 0.90 (Trading below book value)
• EV/EBITDA Ratio: 3.7x (Low multiple relative to cash flow)

What this estimate hides is the complexity of a holding company's valuation, which can be tricky to analyze. You need to look at the sum-of-the-parts, especially with segments like Kaplan International and the television broadcasting assets.

Recent Price Action and Dividend Profile

While the valuation multiples scream 'buy,' the stock price has actually performed well lately. Over the last 12 months, the stock has climbed by about 16.94%, with a year-to-date return of over 21.61% as of November 2025. The recent closing price is around $1,060.92 per share. This upward trend suggests some investors are starting to recognize the value, but the multiples still haven't fully adjusted.

For income-focused investors, Graham Holdings Company isn't a high-yield play, but it is reliable. The company pays an annual dividend of $7.20 per share, which translates to a modest dividend yield of about 0.68%. More importantly, the dividend payout ratio is extremely low at just 4.29% of earnings. This signals that the dividend is incredibly safe and has vast room for growth or, more likely, that the company prefers to reinvest earnings or execute share buybacks, which they have done.

Analyst Consensus and the Verdict

The analyst community's official consensus on Graham Holdings Company is exceptionally thin, which is often the case for smaller, more complex holding companies. Several major financial data platforms report 0 analysts covering the stock. However, one source does flag a Wall Street consensus of Sell, which sharply contrasts with the low valuation multiples we just reviewed. This divergence is a classic signal to do your own deep dive. It means the market isn't in agreement. The lack of coverage is why opportunities like this exist in the first place.

To get a clearer picture of the different businesses driving these numbers, you should consider Exploring Graham Holdings Company (GHC) Investor Profile: Who's Buying and Why?

My advice is to treat the low P/E as a strong indicator of value, but acknowledge the market's skepticism reflected in the low analyst confidence. Your next step should be to dissect the balance sheet and cash flow statement, focusing on the quality of earnings from the Kaplan and Healthcare segments.

Risk Factors

You're looking at Graham Holdings Company (GHC) and seeing a strong, diversified portfolio, but even a company with Q3 2025 revenue of $1.28 billion has clear headwinds you need to map out. The biggest risk isn't a single catastrophic event; it's the slow, steady erosion in legacy segments that requires constant strategic offsetting.

The core challenge is a classic one: managing decline in old-guard businesses while fueling growth in newer, competitive areas. Honestly, the diversification across education, media, healthcare, and manufacturing is GHC's main defense, but it doesn't eliminate the segment-specific risks.

Operational and Industry Headwinds

The most immediate operational risk is the performance of the Television Broadcasting and Automotive segments. Despite overall strong Q3 2025 results-net income attributable to common stockholders rose to $122.9 million-operating income actually declined to $67.1 million, down from $81.6 million in the same period last year. That's a clear signal of weakness in those areas. Here's the quick math on where the pressure is coming from:

• Television Broadcasting: The cord-cutting trend is defintely impacting retransmission revenue. This is a structural, industry-wide shift that GHC must continually address through innovation in content delivery.
• Automotive: This segment, along with broadcasting, contributed to the drop in operating income, suggesting vulnerability to consumer spending shifts and general economic uncertainty.
• Competitive Pressure: In the education sector, GHC's Kaplan International faces intense competition from online providers. You must consider that maintaining market share against digital platforms requires heavy, ongoing investment.

Financial and Strategic Risks

On the financial side, management is actively managing the capital structure, which is smart, but it introduces execution risk. The recent move to issue $500 million in senior unsecured notes and increase the revolving credit facility to $400 million reduces immediate refinancing risk, but it also means the company has to execute flawlessly on integrating its strategic acquisitions to service that debt and maintain profitability. What this estimate hides is the potential for integration failures, which can quickly turn a strategic acquisition into a drain on capital.

Plus, GHC isn't immune to regulatory and legal challenges. The company's 10-Q filing points to potential future losses from existing and threatened legal proceedings that could reach approximately $10 million. Also, in Q3 2025, GHC recorded impairment charges of $2.24 million for intangible and other long-lived assets, a modest amount relative to net income, but a reminder that not all assets are performing as expected. You can get a deeper dive into the company's long-term philosophy here: Mission Statement, Vision, & Core Values of Graham Holdings Company (GHC).

The mitigation strategy is clear: The diversified structure is the primary risk hedge. The strong cash, marketable equity securities, and other investments position, totaling $1,242.9 million as of September 30, 2025, gives them the liquidity to weather most near-term shocks and continue funding growth in the education and manufacturing segments, which are performing well.

Growth Opportunities

You're looking for where Graham Holdings Company (GHC) is going next, and the answer is clear: the company is actively shedding legacy constraints while doubling down on high-margin, growth-oriented businesses. The core thesis for GHC's future is a strategic pivot, powered by its diversified portfolio and a strong balance sheet that allows for opportunistic acquisitions.

The company's near-term revenue growth is defintely being driven by two segments. In Q3 2025, Graham Holdings Company reported total revenue of $1,278.9 million, a 6% year-over-year increase, largely propelled by its Education and Healthcare arms.

• Education (Kaplan): Capitalizing on global demand for professional and higher education, Kaplan's operating income surged by 41% year-over-year in Q3 2025 to $49.1 million. This segment is a reliable cash cow, with growth driven by its International and Supplementary Education divisions.
• Healthcare (Graham Healthcare Group): This is the fastest-growing segment, with Q3 2025 revenue accelerating by 34% year-over-year to $208.4 million. The focus on home healthcare services and margin expansion signals significant long-term potential.
• Manufacturing: This segment showed a surprising acceleration, delivering 30% year-on-year revenue growth in Q3 2025, reaching $124.2 million, thanks partly to strategic acquisitions like Arconic Architectural Products, LLC.

The company is a trend-aware realist, actively managing its portfolio to map opportunities. You can see this in the strategic moves made in 2025, which are clear actions for future growth.

Here's the quick math on the potential upside: a significant near-term opportunity lies in the potential monetization of CSI Pharmacy, a key part of the Healthcare segment. Analysts estimate a spin-off or sale of this asset could unlock approximately $166 per share in value for shareholders, which is over 17% of the current share price. That's a game-changer. Plus, the company has been using its strong cash position-over $1.243 billion in cash and marketable equity securities as of Q3 2025-to execute strategic acquisitions and maintain a robust share buyback program with $500 million remaining under authorization.

The company's competitive advantages are rooted in its structure, what some call a 'Mini-Berkshire' due to its diversified business model. This diversification (Education, Media, Healthcare, Manufacturing) helps mitigate risks associated with market fluctuations in individual sectors, like the ongoing cord-cutting challenges in the Television Broadcasting segment.

The table below summarizes the core growth drivers and their recent performance:

The management's strategic focus and strong financial capacity position Graham Holdings Company for continued growth, even as it navigates headwinds in its legacy businesses. For a deeper dive into the company's long-term vision, you can review its Mission Statement, Vision, & Core Values of Graham Holdings Company (GHC).

So, the next step is to monitor the progress of the CSI Pharmacy monetization and watch for further acquisitions in the high-growth Healthcare and Manufacturing segments.