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Kadant (KAI)
:KAI
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Kadant
(NYSE:KAI)
Rating:64Neutral
Price Target:
$329.00
▲( 6.50% Upside)
Positive Factors
Business Model
A stable recurring revenue business model with approximately 65% of revenue generated year-to-date through Q3/24 in recurring aftermarket parts sales.
Earnings
Kadant's Q1/25 results showed revenue and adjusted EPS exceeding guidance ranges.
Market Trends
The Flow Control segment's revenue increased 8% due to strength in North America, driven by positive market trends such as decarbonization and automation.
Negative Factors
Bookings
Total bookings came in at $256.2 million below expectations driven primarily by weaker-than-expected material handling bookings and industrial processing.
Capital Spending
Delayed capital spending amid heightened macroeconomic uncertainty was a key discussion topic during Kadant's first-quarter conference call.
Guidance
Management's updated 2025 guidance for revenue and adjusted EPS is lower than previous guidance, impacted by tariffs.
Kadant (KAI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.64B
Dividend Yield0.42%
Average Volume (3M)151.26K
Price to Earnings (P/E)32.8
Beta (1Y)1.33
Revenue Growth6.83%
EPS Growth-1.84%
CountryUS
Employees3,500
SectorIndustrials
Sector Strength90
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)2.10
Shares Outstanding11,775,859
10 Day Avg. Volume151,688
30 Day Avg. Volume151,265
Financial Highlights & Ratios
PEG Ratio-11.95
Price to Book (P/B)5.32
Price to Sales (P/S)0.00
P/FCF Ratio29.47
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$327.50Price Target Upside6.01% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Kadant Business Overview & Revenue Model
Company DescriptionKadant Inc. supplies technologies and engineered systems worldwide. It operates through three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables, consisting of doctor systems and holders, doctor blades, shower and fabric-conditioning systems, formation systems, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, logging machinery, industrial automation and control systems, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and balers and related equipment; and manufactures and sells biodegradable absorbent granules for carriers in as carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company was formerly known as Thermo Fibertek Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.
How the Company Makes MoneyKadant Inc. generates revenue through the sale of its specialized products and systems that improve the efficiency and sustainability of industrial processes. The company's key revenue streams include the manufacturing and selling of papermaking systems such as stock-preparation equipment, fluid handling systems, and doctoring, cleaning, and filtration systems. Additionally, Kadant offers wood processing systems, including debarking, chipping, and wood handling equipment. Besides product sales, Kadant also benefits from aftermarket services including spare parts, maintenance, and technical support, which contribute significantly to its earnings. The company's strong emphasis on innovation and efficiency, along with strategic partnerships and a global customer base, are significant factors driving its revenue growth.
Kadant Financial Statement Overview
Summary
Kadant exhibits strong financial health with robust revenue growth and efficient cash generation. The company maintains a solid equity base but faces increased leverage, warranting attention. Overall, Kadant is financially sound, with slight caution due to higher debt levels.Income Statement
Kadant demonstrates robust revenue growth with a 10.0% increase in total revenue from 2023 to 2024. The company maintains a healthy gross profit margin at approximately 44.2% and a consistent EBIT margin around 16.3%. However, the net profit margin decreased from 12.1% in 2023 to 10.6% in 2024, indicating a slight decline in profitability.85
Very Positive
Balance Sheet
The balance sheet reveals a strong equity position with an equity ratio of approximately 59.2%. The debt-to-equity ratio increased from 0.18 in 2023 to 0.34 in 2024, reflecting higher leverage. Return on Equity (ROE) remains strong at 13.2%, showcasing effective use of equity capital despite the increased debt levels.78
Positive
Cash Flow
Cash flow statements depict a stable operating cash flow to net income ratio of 1.39 in 2024, indicating solid cash generation. Free cash flow growth is modest at 0.4% from 2023 to 2024. The company maintains a healthy free cash flow to net income ratio of 1.20, reflecting efficient cash conversion.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.05B | 957.67M | 904.74M | 786.58M | 635.03M | Gross Profit |
| 466.15M | 416.31M | 389.56M | 337.37M | 277.31M | EBIT |
| 171.25M | 165.76M | 171.28M | 116.71M | 81.12M | EBITDA |
| 171.25M | 200.85M | 187.77M | 159.35M | 115.80M | Net Income Common Stockholders |
| 111.60M | 116.07M | 120.93M | 84.04M | 55.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 94.66M | 103.83M | 79.72M | 94.16M | 66.64M | Total Assets |
| 1.43B | 1.18B | 1.15B | 1.13B | 927.57M | Total Debt |
| 288.53M | 135.61M | 204.98M | 269.51M | 233.47M | Net Debt |
| 193.87M | 31.78M | 125.26M | 175.35M | 166.83M | Total Liabilities |
| 572.22M | 399.43M | 494.31M | 566.60M | 430.67M | Stockholders Equity |
| 847.13M | 773.70M | 655.57M | 565.62M | 496.90M |
| Cash Flow | Free Cash Flow | |||
| 134.26M | 133.69M | 74.43M | 149.65M | 85.29M | Operating Cash Flow |
| 155.26M | 165.54M | 102.63M | 162.42M | 92.88M | Investing Cash Flow |
| -319.14M | -30.79M | -29.52M | -154.47M | -14.54M | Financing Cash Flow |
| 159.91M | -111.11M | -80.57M | 22.81M | -84.56M |
Kadant Technical Analysis
Negative
308.93
Price Trends
319.14
Negative
343.02
Negative
343.50
Negative
Market Momentum
-0.39
Negative
47.20
Neutral
39.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KAI, the sentiment is Negative. The current price of 308.93 is above the 20-day moving average (MA) of 308.91, below the 50-day MA of 319.14, and below the 200-day MA of 343.50, indicating a neutral trend. The MACD of -0.39 indicates Negative momentum. The RSI at 47.20 is Neutral, neither overbought nor oversold. The STOCH value of 39.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KAI.
Kadant Risk Analysis
Kadant disclosed 33 risk factors in its most recent earnings report. Kadant reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kadant Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.45B | 38.79 | 16.33% | 0.30% | 10.41% | 34.56% | |
74 Outperform | $5.57B | 25.79 | 6.93% | ― | -4.01% | -8.86% | |
72 Outperform | $4.05B | 23.20 | 14.11% | 1.16% | -1.26% | -4.84% | |
70 Outperform | $3.76B | 44.49 | 5.90% | 0.67% | 2.92% | ― | |
69 Neutral | $3.96B | 27.63 | 17.68% | 1.06% | 10.96% | 43.44% | |
64 Neutral | $4.39B | 11.81 | 5.17% | 249.38% | 3.98% | -12.17% | |
64 Neutral | $3.64B | 32.79 | 13.38% | 0.42% | 6.83% | -1.84% |
* Industrials Sector Average
Performance Comparison
KAI
Kadant
308.93
36.84
13.54%
NPO
Enpro
178.64
31.77
21.63%
FELE
Franklin Electric Co
84.72
-12.22
-12.61%
MWA
Mueller Water Products
24.42
5.84
31.43%
CSWI
CSW Industrials
302.16
41.25
15.81%
GTES
Gates Industrial
20.94
3.26
18.44%
Kadant Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: -2.10%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Negative
While the company experienced strong aftermarket parts business and flow control segment growth, challenges such as revenue decline, adjusted EBITDA decrease, and the impact of tariffs weighed heavily on the overall performance. The revised guidance due to tariffs further adds to the negative sentiment.Q1-2025 Updates
Positive Updates
Strong Aftermarket Parts Business
Aftermarket parts bookings represented 74% of total bookings, reaching a record $190 million. This strong demand is attributed to a large installed base and the company's ability to deliver exceptional value to customers.
Flow Control Segment Growth
Flow Control segment saw solid demand with bookings up 6% compared to Q1 of last year, and revenue increased by 7% to $92 million. The adjusted EBITDA for this segment rose by 8%.
High Gross Margin
Gross margin in the first quarter of 2025 was 46.1%, the highest since 2017, up by 150 basis points compared to the first quarter of 2024.
Healthy Free Cash Flow
Free cash flow increased 15% to $19 million compared to the first quarter of 2024.
New Order Activity
New order activity was up in the first quarter, despite challenges from tariff uncertainties.
Negative Updates
Revenue Decline
Revenue in the first quarter declined by 4% compared to the same period last year, primarily due to weaker capital shipments in the Industrial Processing segment.
Adjusted EBITDA Decrease
Adjusted EBITDA decreased by 8% to $47.9 million due to lower capital revenue, leading to a decline in adjusted EBITDA margin by 100 basis points.
Industrial Processing Segment Challenges
The Industrial Processing segment experienced a 15% decline in revenue compared to the record set in the previous year, mainly due to a decrease in capital shipments.
Impact of Tariffs
Tariffs have introduced significant uncertainty, affecting capital order timing and leading to an estimated incremental material cost of $5 million to $6 million.
Revised Guidance Due to Tariffs
Full-year 2025 guidance was revised downward due to tariff-related impacts, with expected revenue reduced to $1.020 billion to $1.040 billion and adjusted EPS to $9.05 to $9.25.
Company Guidance
In Kadant's first quarter 2025 earnings call, the company provided guidance amidst ongoing uncertainties due to global tariffs. The impact of tariffs, particularly on steel and aluminum imports, is estimated to increase material costs by approximately $5 to $6 million, equating to $0.32 to $0.39 per share. Despite this, Kadant expects to mitigate these costs through supplier collaboration and cost-sharing with customers. The company's full-year revenue guidance has been revised to $1.020 billion to $1.040 billion, down from $1.040 billion to $1.065 billion, with adjusted EPS now forecasted at $9.05 to $9.25. This revision reflects both tariff impacts and delays in capital orders. The first quarter saw strong aftermarket parts bookings, representing 74% of total bookings at a record $190 million, while revenue declined 4% year-over-year due to weaker capital shipments. Gross margin reached 46.1%, the highest since 2017, driven by a higher percentage of aftermarket parts revenue. For the second quarter, Kadant projects revenue of $243 million to $250 million, with adjusted EPS anticipated between $1.90 and $2.00. The company remains focused on maintaining its operational resilience and strengthening its business globally, leveraging its decentralized structure to navigate economic challenges effectively.Kadant Corporate Events
Executive/Board ChangesShareholder Meetings
Kadant’s Annual Stockholders Meeting Highlights Key Decisions
Neutral
May 15, 2025
On May 14, 2025, Kadant Inc. held its annual meeting of stockholders where several key proposals were voted upon. The stockholders elected Jonathan W. Painter and Jeffrey L. Powell as directors for a term expiring in 2028, approved a non-binding advisory resolution on executive compensation, granted restricted stock units to non-employee directors, and ratified KPMG LLP as the independent accounting firm for 2025.
The most recent analyst rating on (KAI) stock is a Buy with a $360.00 price target. To see the full list of analyst forecasts on Kadant stock, see the KAI Stock Forecast page.
Financial Disclosures
Kadant Reports Mixed Q1 2025 Financial Results
Neutral
Apr 29, 2025
Kadant Inc. reported its financial results for the first quarter of 2025, showing a mixed performance with a 3% increase in bookings to $256 million, but a 4% decrease in revenue to $239 million compared to the previous year. Despite challenges such as geopolitical uncertainties and trade issues, the company maintained strong margin performance with a gross margin increase to 46.1% and a 15% rise in free cash flow. However, net income and GAAP EPS both decreased by 3%, while adjusted EPS saw a more significant drop of 12%. The company anticipates incremental tariff costs and economic uncertainties affecting its 2025 outlook, leading to revised revenue and earnings expectations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.