Buy Graham Holdings Stock. Its Parts Are Worth More Than the Whole.

Graham Holdings’ education unit Kaplan is its largest business by revenue and profit. (Dreamstime)

Graham owns an array of businesses including Kaplan test prep, and has family ties to Berkshire Hathaway. The stock looks cheap.

GHC

Graham Holdings Co.

1-Year Price Chart

Created with Highstock 2.1.8

$920.42

as of market close August 1, 2025

Market Cap

$4.16 B

NTM P/E

16.16

Div Yield

0.78%

Beta

0.75

52 Week Range

$691.41

$1,015.00

Sometimes the whole is greater than the sum of the parts. That’s not the case with Graham Holdings , whose value is just waiting to be unlocked.

Think of Graham as a small-scale version of Berkshire Hathaway, its model. Like Berkshire, Graham, which used to be known as the Washington Post Co. before it sold the former flagship newspaper to Jeff Bezos in 2013 for $250 million, owns an array of businesses.

They include a for-profit education company, a group of TV stations, and healthcare services firms. It also holds eight auto dealerships, several manufacturing businesses, a picture-framing company, and a group of restaurants in the Washington, D.C., area led by the historic and high-grossing Old Ebbitt Grill near the White House. Also like Berkshire, it has an investment portfolio and plenty of cash to do deals.

Unlike Berkshire, Graham stock trades at a fraction of the value of the conglomerate’s diverse businesses. But there are a couple potential catalysts, including a possible spinoff of the company’s TV stations, a narrowing of losses at a group of smaller businesses including picture-framing company Framebridge, and increased attention on fast-growing healthcare businesses that could get the stock moving higher.

Graham also has an overfunded pension fund that is a valuable and underappreciated asset, even if it isn’t easy to monetize. Sum up the parts, and the shares of the low-profile company have an estimated asset value of more than $1,500, far more than their current price of $950.

“It’s rare to find such a well-run company so inexpensively valued and with so many opportunities to improve the share price,” says Eli Samaha, a managing partner at Madison Avenue Partners, a Graham investor.

CEO Tim O’Shaughnessy says the company’s goal is to boost cash flow and reduce the share count, while maintaining a strong balance sheet. “We have good businesses and want to compound capital for shareholders,” he says.

This sounds like Warren Buffett, and that’s not surprising since the Graham family goes back decades with Berkshire, starting with Katharine Graham, who befriended Buffett in the 1970s. O’Shaughnessy is married to a daughter of Don Graham, 80, the son of Kay Graham and the former CEO and chairman.

It isn’t easy to analyze Graham. The quarterly financials are complex, with special factors generally muddying results. Like Berkshire, Graham doesn’t hold quarterly conference calls or provide any financial guidance. It’s run like a private company, with the Graham family controlling it through supervoting shares—their economic interest is about 25%. There is virtually no analyst coverage.

Graham earned $26 a share in the first half of 2025 after certain adjustments. That annualizes to more than $50 a share, making the stock no bargain at 18 times earnings. But broadcast profits are depressed in an off year for national elections, and the company is losing about $80 million annually from what it calls other businesses, mainly Framebridge. Those losses are likely to diminish, Samaha says, and the company is high on the opportunity for Framebridge in the fragmented custom framing business. Graham seems capable of producing $80-plus a share in earnings by 2027.

Because of its complexity, investors like to use a sum-of-the-parts analysis to determine its value—and by that measure, the stock looks cheap. Many conglomerates trade at discounts to the sum of their parts because of concern that value won’t be unlocked. In recent years, corporate giants ranging from General Electric to United Technologies , Danaher , and Johnson & Johnson have broken up or spun off businesses to simplify their structures.

A full breakup of the company is unlikely, but Samaha sees a possible spinoff of Graham’s attractive broadcast TV business, which includes NBC affiliates in Houston and Detroit, the latter a big market for political advertising in national election years.

There is a continuing consolidation among TV stations as federal rules about ownership of more than one station per market are getting relaxed. The TV business could be worth $1.5 billion or more. O’Shaughnessy said in late 2024 that the company is open to potential consolidation opportunities. The company hasn’t been averse to spinoffs, jettisoning its cable TV business Cable One in 2015. That willingness is a bullish sign for a possible spinoff.

That would leave a number of strong businesses behind. The education unit Kaplan is the largest business by revenue and profits. It includes the Purdue online university and its original test prep business. Profits were up 31% in the first half of 2025, and it could be worth almost $2 billion.

Graham’s best growth opportunity is in healthcare, consisting of a group of services such as home health, hospices, and in-home infusion. Revenue was up 36% in the first half of 2025, and pretax operating profits more than doubled to $43 million. That business, which has garnered praise from Barron’s Roundtable members Meryl Witmer and Henry Ellenbogen, could be worth $1.5 billion, based on comparable public companies.

Graham also has an excellent balance sheet, with cash and investments of over $1.1 billion—among the investments is about $600 million of Berkshire stock—and debt of around $800 million. One critique is that the company should be more aggressive in repurchasing stock—it has bought back more than 15% since the end of 2019—given the discounted price relative to intrinsic value. But it has bought back very little stock so far this year.

We conservatively estimate the value of the pension plan at $1 billion, although it’s overfunded by $2.5 billion, due to the challenges of monetizing it thanks to strict tax rules. (The pension fund owns $600 million of Berkshire, and its success represents another connection, as a chunk of the money has long been run by Ruane Cunniff and First Manhattan, investment firms with ties to Buffett.)

But the company has gotten creative, having bought an aluminum-products business in the second quarter, largely financed by over $100 million of the pension surplus. Add up the individual pieces, and the company is likely worth $6.9 billion—$2.7 billion more than its market value of $4.2 billion.

Graham involves patient investing with the controlling family in a diverse set of businesses whose value could surface or get realized in the coming years.

Write to Andrew Bary at andrew.bary@barrons.com