Kadant (KAI) AI Stock Analysis

• Market Cap: $3.85B
• Dividend Yield: 0.4%
• Average Volume (3M): 107.47K
• Price to Earnings (P/E): 36.4
• Beta (1Y): 1.35
• Revenue Growth: 1.74%
• EPS Growth: -7.64%
• Country: US
• Employees: 3,500
• Sector: Industrials
• Sector Strength: 73
• Industry: Industrial - Machinery
• EPS (TTM): 2.31
• Shares Outstanding: 11,777,467
• 10 Day Avg. Volume: 92,893
• 30 Day Avg. Volume: 107,473
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 3.77
• Enterprise Value/Gross Profit: 8.38
• Enterprise Value/Ebitda: 18.15
• 1Y Price Target: $340.00
• Price Target Upside: 3.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 69 Neutral
• Price Target: $361.00 ▲(10.41% Upside)

Kadant's overall stock score reflects solid financial performance and efficient cash flow management, which are the most significant strengths. Technical indicators suggest mild bullish momentum, but high valuation metrics and challenges highlighted in the earnings call, such as revenue decline and global trade impacts, weigh on the score.

Positive Factors

Financial Performance

Kadant’s Q2/25 results exceeded expectations, with strong performance in revenue, adjusted EBITDA, and adjusted EPS.

Market Expansion

The recent acquisition of Italian-based Babbini could enhance Kadant's market position and expand its capabilities.

Order Activity

Kadant experienced a 16% increase in ending backlog, driven by improving capital equipment orders.

Negative Factors

Economic Uncertainty

Tariff uncertainty, a deceleration in China, and sluggish U.S. residential activity continue to act as an overhang.

Guidance Reduction

Kadant reduced its 2025 guidance due to deferred capital equipment demand and China tariffs.

Tariff Challenges

Tariff headwinds remain relatively unchanged for 2025, posing a potential challenge to Kadant's profitability.

Kadant Business Overview & Revenue Model

Company Description

Kadant 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 Money

Kadant generates revenue through multiple key streams, including the sale of engineered systems and products, aftermarket parts, and services. The company earns a significant portion of its revenue from the sale of equipment used in paper and packaging production, which includes advanced technologies for drying, filtration, and fluid handling. Aftermarket services, including parts replacement, maintenance, and technical support, contribute to recurring revenue, as customers require ongoing support for their systems. Additionally, Kadant has established partnerships with various industrial players, enhancing its market reach and enabling the company to leverage collaborative opportunities for innovation and efficiency improvements, further driving its earnings potential.

Kadant Financial Statement Overview

Summary

Kadant exhibits strong financial health with stable profitability, efficient operations, and prudent financial management. The income statement shows robust revenue growth and profitability, while the balance sheet highlights good leverage management and equity utilization. Cash flow generation is strong, supporting growth and strategic investments. Some attention is needed on debt management as liabilities increase.

Income Statement

Kadant's income statement is robust with a consistent gross profit margin of around 44% over the periods. The net profit margin is stable at approximately 10%, reflecting efficiency in operations. Revenue growth from 2022 to 2023 shows a significant increase of 5.85%, indicating strong market demand. EBIT and EBITDA margins are healthy, demonstrating strong operational performance and management efficiency.

Balance Sheet

Kadant's balance sheet reflects a moderate debt-to-equity ratio, showing prudent financial leverage. The return on equity remains strong, indicating effective use of equity capital. The equity ratio is stable, suggesting a solid financial position and asset management. Despite an increase in total debt, the company's equity growth supports stability.

Cash Flow

The cash flow statement is strong, with a consistent operating cash flow to net income ratio, indicating effective cash management. Free cash flow growth is evident, reflecting the company's ability to generate cash after capital expenditures. The company maintains a good balance between investing and financing activities to support growth and shareholder returns.

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	460.67M	466.15M	416.31M	389.56M	337.37M	277.31M
EBITDA	212.65M	222.69M	200.71M	187.77M	150.72M	112.11M
Net Income	105.84M	111.60M	116.07M	120.93M	84.04M	55.20M
Balance Sheet
Total Assets	1.36B	1.43B	1.18B	1.15B	1.13B	927.57M
Cash, Cash Equivalents and Short-Term Investments	97.19M	94.66M	103.83M	76.37M	91.19M	65.68M
Total Debt	248.92M	288.53M	135.61M	204.98M	269.51M	233.47M
Total Liabilities	547.22M	572.22M	399.43M	494.31M	566.60M	430.67M
Stockholders Equity	816.65M	847.13M	773.70M	653.85M	563.94M	495.36M
Cash Flow
Free Cash Flow	150.12M	134.26M	133.69M	74.43M	149.65M	85.29M
Operating Cash Flow	167.69M	155.26M	165.54M	102.63M	162.42M	92.88M
Investing Cash Flow	-24.56M	-319.14M	-30.79M	-29.52M	-154.47M	-14.54M
Financing Cash Flow	-124.40M	159.91M	-111.11M	-80.57M	22.81M	-84.56M

Kadant Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 326.95
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 326.95 is below the 20-day moving average (MA) of 333.79, below the 50-day MA of 331.38, and below the 200-day MA of 343.17, indicating a bearish trend. The MACD of -2.03 indicates Positive momentum. The RSI at 47.05 is Neutral, neither overbought nor oversold. The STOCH value of 31.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KAI.

Kadant Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FELE	81 Outperform	$4.34B	25.24	14.38%	1.07%	2.20%	-3.74%
MWA	77 Outperform	$4.19B	28.28	17.33%	1.00%	10.19%	20.71%
GTES	74 Outperform	$6.68B	33.33	6.31%	―	-2.67%	-17.55%
NPO	71 Outperform	$4.62B	54.92	5.78%	0.56%	4.99%	169.24%
KAI	69 Neutral	$3.85B	36.41	12.21%	0.40%	1.74%	-7.64%
CSW	64 Neutral	$4.46B	31.75	15.79%	0.20%	12.27%	19.05%
Sector *	64 Neutral	$10.75B	15.69	7.62%	2.01%	2.75%	-15.14%

Kadant Corporate Events

Kadant Reports Mixed Q2 2025 Financial Results

Kadant Inc. reported a mixed financial performance for the second quarter of 2025, with a 7% increase in bookings to $269 million but a 7% decrease in revenue to $255 million compared to the previous year. Despite a decline in net income and earnings per share, the company saw significant improvements in operating and free cash flow, indicating strong cash management. The company remains optimistic about future bookings and maintains its revenue and adjusted EPS guidance for the full year, reflecting stable demand for its products and a healthy backlog.