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Kadant Inc (KAI)
NYSE:KAI
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Kadant
(NYSE:KAI)
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Rating:68Neutral
Price Target:
$345.00
▲(1.74% Upside)
Action:ReiteratedDate:01/29/26
KAI scores solidly on profitability and balance-sheet strength, supported by a constructive technical uptrend. The main constraints are a high valuation versus modest yield and mixed growth signals (slight revenue decline and weak FCF growth), while the earnings update was balanced—strong aftermarket/cash flow but continued softness in capital projects and higher SG&A.
Positive Factors
Profitability & Margins
Sustained high gross and operating margins indicate durable pricing power and efficient cost structure in industrial systems. These margins support resilient earnings across cycles, enable reinvestment in product development, and provide a buffer against raw‑material or input cost inflation.
Balance Sheet Strength
Low leverage and a strong equity base give Kadant financial flexibility to fund organic investments, integrate acquisitions, and withstand demand shocks. A conservative capital structure reduces refinancing risk and preserves optionality for strategic moves without stressing liquidity.
Aftermarket Recurring Revenue & Cash Generation
Growing aftermarket sales provide a higher‑margin, recurring revenue stream less tied to capital cycles, improving revenue stability. Strong operating cash flow and free cash flow validate cash generation capability, supporting capex, dividends, and strategic M&A even in slower equipment markets.
Negative Factors
Revenue Stagnation
A slight secular revenue decline signals demand headwinds in core papermaking and industrial markets. Persistent top‑line stagnation can erode scale advantages, pressure margins over time, and force greater reliance on cost cuts or acquisitions to deliver growth.
Free Cash Flow Volatility
A large negative swing in FCF growth undermines predictability of internally generated funds. Even with recent positive FCF, such volatility raises the risk that planned investments, debt repayments, or shareholder returns could be constrained in tougher periods, complicating long‑term planning.
Weak Capital Project Demand
Sustained weakness in capital project orders reduces visibility into future equipment sales, which are key to growth and higher margin expansion. Prolonged softness can lengthen sales cycles, depress capital shipments, and increase dependence on aftermarket and M&A to sustain revenue growth.
Kadant (KAI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.95B
Dividend Yield0.46%
Average Volume (3M)145.77K
Price to Earnings (P/E)38.8
Beta (1Y)1.31
Revenue Growth-0.96%
EPS Growth-11.55%
CountryUS
Employees3,500
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)2.27
Shares Outstanding11,778,135
10 Day Avg. Volume195,513
30 Day Avg. Volume145,769
Financial Highlights & Ratios
PEG Ratio-8.93
Price to Book (P/B)4.86
Price to Sales (P/S)3.91
P/FCF Ratio30.67
Enterprise Value/Market Cap1.07
Enterprise Value/Revenue4.15
Enterprise Value/Gross Profit9.19
Enterprise Value/Ebitda19.28
Forecast
1Y Price Target
$341.50Price Target Upside0.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)11.62
Revenue Forecast (FY)$1.17B
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 generates revenue primarily through the sale of its equipment and systems, as well as through ongoing service and support contracts. Key revenue streams include the initial sale of products, which is complemented by aftermarket sales of replacement parts and maintenance services. Additionally, the company benefits from long-term contracts with customers in the papermaking and wood processing industries, which provide a steady stream of income. Kadant also engages in strategic partnerships and collaborations with other industry players to enhance its product offerings and expand its market reach, contributing to its overall earnings.
Kadant Earnings Call Summary
Earnings Call Date:Feb 23, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Neutral
The call reflects a mixed but measured tone. There are clear operating strengths: record Q4 revenue, a record aftermarket mix, strong cash flow and successful recent acquisitions. Segment-level improvements and conservative but upgradeable 2026 guidance are positives. Offsetting these are meaningful headwinds: weaker capital activity (capital revenue down 16% for the year), tariff-driven margin pressure, higher SG&A and tax impacts, rising net debt and an expected leverage increase tied to acquisitions, plus timing uncertainty for large capital orders. Management is cautious and focused on cash generation and integration upside, resulting in an outlook that balances tangible operational wins against persistent macro and timing risks.Q4-2025 Updates
Positive Updates
Record Q4 and Aftermarket Strength
Q4 revenue reached a record $286.2M, up 11% year-over-year, driven by acquisitions and a record aftermarket parts business; aftermarket parts comprised ~70% of Q4 revenue (71% for the full year). Bookings increased 12% in Q4 versus prior year.
Full-Year Revenue and Aftermarket Mix
Fiscal 2025 revenue of ~$1.05B (reported $1.052B), with aftermarket parts at a record 71% of total revenue (up from 66% in 2024), supporting higher gross margins year-over-year.
Strong Cash Flow and Free Cash Flow Records
Operating cash flow for the full year increased 10% to $171.3M and free cash flow rose 15% to a record $154.3M; Q4 operating cash flow was $61M.
Q4 Adjusted EBITDA and Margins
Adjusted EBITDA in Q4 increased 11% to $58M and Q4 adjusted EBITDA margin was 20.3% of revenue, reflecting improved profitability in the quarter.
Segment-Level Revenue and Margin Improvements
Industrial Processing Q4 revenue rose 16% to $118M with aftermarket parts up 31% and adjusted EBITDA margin improving 90 bps. Material Handling Q4 revenue rose 11% to $69M with adjusted EBITDA margin up 130 bps to 22.1%. Flow Control Q4 revenue increased 5% to $100M with aftermarket parts up 9%.
Acquisitions and Integration Progress
Closed Clyde Industries and Babbini in H2 2025; integration progressing well. Announced definitive agreement to acquire voestalpine BÖHLER Profil GmbH (~EUR 157M) to expand capabilities.
Conservative but Upbeat 2026 Guidance
2026 revenue guidance of $1.160B–$1.185B and adjusted EPS guidance $10.40–$10.75 (excl. recurring intangible amortization). After adding back recurring intangible amortization, adjusted EPS guidance is $12.53–$12.88, signaling management confidence in cash-driven profitability.
Operational Recognition and Long-Term Market Opportunities
Named one of America's most responsible companies (Newsweek) for the sixth straight year; management highlights secular opportunities in recycling, waste management, data centers and industrial automation as drivers of future capital activity.
Negative Updates
Full-Year Adjusted EPS and Adjusted EBITDA Declines
Full-year adjusted EPS decreased from $10.28 (2024) to $9.26 in 2025 (down $1.02). Full-year adjusted EBITDA declined 6% to $216.3M (20.6% of revenue) from $229.7M (21.8% of revenue) in 2024, driven largely by lower capital revenue.
Decline in Capital Revenue
Full-year capital revenue was down 16% versus prior year, and Q4 organic capital revenue declined 7% (organically, parts +3% while capital -7% in Q4), reflecting softness in capital project activity.
Tariff Volatility and Cost Pressures Impacting Margins
Management cited significant tariff volatility and cost pressures in 2025 that negatively affected gross margins and product mix, especially in Flow Control where adjusted EBITDA and margins were down versus prior year.
Increased SG&A and Higher Tax Rate
SG&A increased as a percentage of revenue to 28.7% for the full year (from 26.6% in 2024) with SG&A up $21.9M (8% YoY) largely from acquisitions; Q4 tax rate was 30%, higher than anticipated due to global minimum tax and geographic earnings mix, pressuring EPS.
Rising Leverage and Near-Term Debt Impact
Net debt rose to $251.8M at year-end (from $131.1M prior quarter); leverage increased to 1.33 (Q3 0.94). Management expects leverage to increase to just above 2x upon completion of the announced EUR 157M acquisition, and borrowing of $170M was used to fund Clyde acquisition in Q4.
Working Capital and Cash Conversion Deterioration
Cash conversion days increased to 130 from 122 and working capital as a percentage of revenue rose to 18.5% (from 15%), driven by higher inventory levels and the timing/absence of a full year of acquisition revenue.
Booking and Timing Uncertainty for Capital Projects
While backlog was $288M (60% capital / 40% parts), many large capital proposals remain unsigned or delayed as customers await macro/geopolitical clarity; management modeled conservative 2026 organic growth (~flat to +1–3%) and did not include several large potential capital orders in guidance.
Adjusted EPS Reduction Versus Prior Record and GAAP EPS Pressure
GAAP EPS for the full year was $8.65, down 9% from $9.48 in 2024. The company also changed its adjusted EPS methodology (adding back recurring intangible amortization), which restates comparatives and highlights the noncash nature of certain costs but may complicate near-term comparisons.
Company Guidance
Kadant guided fiscal 2026 revenue of $1.160–$1.185 billion and adjusted EPS of $10.40–$10.75 (excludes $0.13 of acquired profit/inventory amortization); after management will add back recurring intangible amortization (forecast $33.4M pre‑tax / $25.1M net of tax, $2.13 per share) the adjusted‑EPS range becomes $12.53–$12.88. First‑quarter 2026 guidance is $270–$280 million of revenue and adjusted EPS $1.78–$1.88 (excl $0.09), which increases to $2.31–$2.41 after the amortization add‑back. Management expects gross margins of ~45.2–45.7%, SG&A of 27.7–28.3% of revenue, R&D ~1.4% of revenue, net interest expense of ~$15.5–$16.0M (excludes any incremental interest from the proposed acquisition), a recurring tax rate of ~27.3–27.8%, depreciation & amortization of ~$60–61M, and CapEx of $23–27M. The guide assumes roughly flat to +1–3% organic growth, excludes the pending voestalpine acquisition (expected to close in Q1 and would push leverage to just above 2), treats Q1 as the weakest quarter due to delayed capital bookings, and leaves upside if several large customer proposals convert to orders.Kadant Financial Statement Overview
Summary
Profitability is solid (TTM gross margin 45.1%, EBIT margin 16.66%, EBITDA margin 21.50%) and leverage is low (debt-to-equity 0.27; equity ratio 61.98%). Offsetting this, TTM revenue growth is slightly negative (-0.5%) and free cash flow growth is weak, raising questions about near-term growth and cash generation momentum.Income Statement
Kadant's income statement shows stable profitability with a gross profit margin of 45.1% and a net profit margin of 9.96% in the TTM period. However, revenue growth has slightly declined by 0.5% in the TTM, indicating potential challenges in maintaining sales momentum. The EBIT and EBITDA margins remain healthy at 16.66% and 21.50%, respectively, reflecting efficient cost management.75
Positive
Balance Sheet
The balance sheet reflects a solid equity position with a debt-to-equity ratio of 0.27, indicating low leverage. Return on equity is reasonable at 11.69%, suggesting effective use of equity capital. The equity ratio stands at 61.98%, demonstrating a strong equity base relative to total assets, which enhances financial stability.70
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth by 282.1% in the TTM, which could be a concern. However, the operating cash flow to net income ratio of 0.76 and free cash flow to net income ratio of 0.90 indicate that the company is generating sufficient cash relative to its net income, supporting operational needs.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.02B | 1.05B | 957.67M | 904.74M | 786.58M | 635.03M |
| Gross Profit | 461.89M | 466.15M | 416.31M | 389.56M | 337.37M | 277.31M |
| EBITDA | 220.18M | 222.69M | 200.71M | 207.05M | 151.18M | 112.11M |
| Net Income | 101.98M | 111.60M | 116.07M | 120.93M | 84.04M | 55.20M |
Balance Sheet | ||||||
| Total Assets | 1.53B | 1.43B | 1.18B | 1.15B | 1.13B | 927.57M |
| Cash, Cash Equivalents and Short-Term Investments | 126.91M | 94.66M | 106.45M | 79.72M | 94.16M | 66.64M |
| Total Debt | 258.00M | 322.84M | 135.61M | 223.44M | 294.07M | 260.07M |
| Total Liabilities | 570.73M | 572.22M | 399.43M | 494.31M | 566.60M | 430.67M |
| Stockholders Equity | 949.85M | 847.13M | 773.70M | 653.85M | 563.94M | 495.36M |
Cash Flow | ||||||
| Free Cash Flow | 145.89M | 134.26M | 133.69M | 74.43M | 149.65M | 85.29M |
| Operating Cash Flow | 162.46M | 155.26M | 165.54M | 102.63M | 162.42M | 92.88M |
| Investing Cash Flow | -29.49M | -319.14M | -30.79M | -29.52M | -154.47M | -14.54M |
| Financing Cash Flow | -96.16M | 159.91M | -111.11M | -80.57M | 22.81M | -84.56M |
Kadant Technical Analysis
Positive
339.11
Price Trends
315.01
Positive
298.30
Positive
310.02
Positive
Market Momentum
5.27
Positive
57.95
Neutral
64.01
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KAI, the sentiment is Positive. The current price of 339.11 is above the 20-day moving average (MA) of 331.27, above the 50-day MA of 315.01, and above the 200-day MA of 310.02, indicating a bullish trend. The MACD of 5.27 indicates Positive momentum. The RSI at 57.95 is Neutral, neither overbought nor oversold. The STOCH value of 64.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $1.66B | 30.46 | 11.45% | ― | 3.08% | 35.81% | |
78 Outperform | $4.68B | 23.59 | 21.55% | 1.09% | 8.75% | 64.82% | |
70 Outperform | $4.37B | 30.72 | 10.89% | 1.06% | 5.06% | -22.73% | |
68 Neutral | $3.95B | 38.81 | 11.32% | 0.46% | -0.96% | -11.55% | |
66 Neutral | $5.00B | 40.26 | 12.02% | 0.26% | 14.87% | 15.63% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $2.96B | 20.62 | 13.54% | 1.42% | 9.30% | -12.55% |
* Industrials Sector Average
KAI
Kadant
339.11
-40.92
-10.77%
CXT
Crane NXT
51.02
-5.57
-9.84%
FELE
Franklin Electric Co
98.61
-2.58
-2.55%
MWA
Mueller Water Products
29.90
4.72
18.75%
THR
Thermon Group Holdings
53.55
23.59
78.74%
CSW
CSW Industrials
294.60
-9.48
-3.12%
Kadant Corporate Events
Business Operations and StrategyM&A Transactions
Kadant Announces Acquisition of Voestalpine Böhler Profil Unit
Positive
Jan 29, 2026
On January 29, 2026, Kadant Holdings GmbH, a subsidiary of Kadant Inc., agreed to acquire voestalpine BÖHLER Profil GmbH & Co KG and its related management company from voestalpine High Performance Metals GmbH for approximately €157 million in cash, subject to customary adjustments. Voestalpine BÖHLER Profil, a specialist in tailor-made special profiles with complex geometries and high-performance industrial knives using near-net-shape rolling, will be integrated into Kadant’s Industrial Processing segment and renamed Kadant Profil GmbH & Co KG upon closing. The deal, which has no financing condition, is expected to close in the first quarter of 2026 pending Austrian regulatory approvals and other customary closing conditions, and may be terminated if not completed by September 30, 2026. The acquisition agreement includes standard representations, warranties, covenants, indemnities, confidentiality, non-compete, and non-solicitation provisions, underlining a structured transaction framework that, if completed, would expand Kadant’s portfolio in high-value, niche industrial profiles and knives, potentially strengthening its position in specialized industrial processing markets.
The most recent analyst rating on (KAI) stock is a Buy with a $356.00 price target. To see the full list of analyst forecasts on Kadant stock, see the KAI Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.