Kennametal (KMT) AI Stock Analysis

• Market Cap: $1.47B
• Dividend Yield: 4.22%
• Average Volume (3M): 1.12M
• Price to Earnings (P/E): 15.6
• Beta (1Y): 1.02
• Revenue Growth: -2.46%
• EPS Growth: -19.05%
• Country: US
• Employees: 8,400
• Sector: Industrials
• Sector Strength: 69
• Industry: Manufacturing - Tools & Accessories
• EPS (TTM): 1.22
• Shares Outstanding: 77,360,330
• 10 Day Avg. Volume: 1,320,827
• 30 Day Avg. Volume: 1,117,827
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.83
• Price to Cash Flow (P/CF): 7.60
• P/FCF Ratio: 7.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $22.00
• Price Target Upside: 16.03% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 8

Kennametal shows a stable financial performance with strong cash flow, but faces challenges in revenue growth and market conditions, especially in EMEA. The stock appears undervalued with an attractive dividend yield. However, the negative technical indicators and cautious outlook from the earnings call temper the overall score.

Positive Factors

Cost Savings

The lower organic sales forecast is partially offset by a $15M pull forward in cost savings initiatives and thus higher second half FY25 margins vs. previous estimates.

Free Operating Cash Flow

Free operating cash flow of $57mn YTD and on track to drive FCF conversion >125%.

Sales Outlook

KMT reiterated its FY2025 sales outlook in the range of $2.0 - $2.1B, which is positive despite previous bearish expectations.

Negative Factors

Aerospace Segment

Aircraft build rates have not returned to pre-pandemic levels, adding pressure to KMT's aerospace segment.

Earnings Guidance

KMT reduced its FY25 EPS guidance to $1.05-1.30 – well below consensus on a weaker development across its end markets.

Organic Revenue Growth

Lower organic revenue growth across both Metal Cutting and Infrastructure segments reflects weakness in Europe and Transportation end markets.

Kennametal Business Overview & Revenue Model

Company Description

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. The company operates through two segments, Metal Cutting and Infrastructure. It offers standard and custom products, including turning, milling, hole making, tooling systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. The company also provides specified product design, selection, application, and support services; and standard and custom metal cutting solutions to aerospace, general engineering, energy, and transportation customers. In addition, it produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; and ceramics used by the packaging industry for metallization of films and papers. It provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force; a network of independent and national distributors; integrated supplier channels; and through the Internet. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.

How the Company Makes Money

Kennametal makes money primarily through the sale of its cutting tools, engineered components, and advanced materials across its Industrial and Infrastructure segments. Revenue is generated from direct sales to industries such as aerospace, automotive, energy, and transportation, where precision and durability are critical. The company also earns from its extensive distribution network and partnerships with original equipment manufacturers (OEMs). Furthermore, Kennametal invests in research and development to innovate and improve its product offerings, which helps maintain competitive pricing and customer loyalty, thus contributing to its earnings. The company's global presence and ability to offer customized solutions also play a significant role in driving its revenue streams.

Kennametal Financial Statement Overview

Summary

Kennametal presents a stable financial position with consistent operational efficiency and strong cash flow management. However, challenges in revenue growth and modest returns on equity suggest areas for improvement to enhance financial performance.

Income Statement

Kennametal's income statement shows a moderate performance with stable gross profit margins around 30% and a net profit margin around 5% in TTM. The revenue growth, however, has been slightly negative recently, signalling potential challenges in sales growth. EBIT and EBITDA margins maintain stability, reflecting consistent operational efficiency.

Balance Sheet

The balance sheet indicates moderate financial health. The debt-to-equity ratio is about 0.47, suggesting a balanced use of leverage. ROE is relatively low, reflecting modest returns on equity investments. The equity ratio is stable, indicating a fair proportion of equity financing, but there is room for improvement in financial returns.

Cash Flow

Cash flow statements show a strong free cash flow growth rate, with operating cash flow consistently exceeding net income, indicating good cash generation from operations. The free cash flow to net income ratio is positive, suggesting efficient capital use, though capital expenditures remain significant.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
2.02B	2.05B	2.08B	2.01B	1.84B	1.89B
	Gross Profit
614.91M	627.09M	646.44M	647.98M	552.48M	529.47M
	EBIT
172.40M	170.22M	192.42M	218.14M	140.10M	142.09M
	EBITDA
240.55M	306.63M	333.15M	371.12M	282.72M	277.68M
	Net Income Common Stockholders
96.21M	109.32M	118.46M	144.62M	54.43M	-5.05M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
110.89M	127.97M	106.02M	85.59M	154.05M	606.68M
	Total Assets
2.31B	2.50B	2.55B	2.57B	2.67B	3.04B
	Total Debt
336.18M	645.75M	595.86M	615.55M	600.47M	1.09B
	Net Debt
225.28M	517.78M	489.84M	529.96M	446.43M	487.77M
	Total Liabilities
936.99M	1.22B	1.23B	1.28B	1.30B	1.77B
	Stockholders Equity
1.35B	1.25B	1.28B	1.25B	1.33B	1.23B
Cash Flow		Free Cash Flow
195.66M	169.55M	163.56M	84.52M	108.38M	-20.41M
	Operating Cash Flow
289.70M	277.11M	257.94M	181.44M	235.68M	223.74M
	Investing Cash Flow
-89.61M	-109.43M	-89.23M	-94.94M	-122.98M	-218.34M
	Financing Cash Flow
-163.29M	-141.75M	-143.11M	-150.74M	-574.25M	425.45M

Kennametal Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 18.96
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMT, the sentiment is Negative. The current price of 18.96 is below the 20-day moving average (MA) of 20.69, below the 50-day MA of 21.56, and below the 200-day MA of 24.22, indicating a bearish trend. The MACD of -0.18 indicates Negative momentum. The RSI at 42.95 is Neutral, neither overbought nor oversold. The STOCH value of 23.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KMT.

Kennametal Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SNA	79 Outperform	$17.62B	17.23	19.95%	2.38%	<0.01%	3.74%
RBC	78 Outperform	$10.47B	45.66	8.35%	―	4.62%	21.58%
LECO	71 Outperform	$10.15B	22.23	35.36%	1.61%	-4.23%	-13.42%
KMT	67 Neutral	$1.47B	15.59	7.67%	4.22%	-2.46%	-19.05%
TKR	62 Neutral	$4.31B	12.33	13.04%	2.21%	-4.11%	-8.74%
Sector *	62 Neutral	$7.62B	13.01	3.19%	3.32%	3.77%	-14.28%
SWK	47 Neutral	$9.12B	31.18	3.22%	5.54%	-2.63%	―

Kennametal Corporate Events

Kennametal Announces Departure of Franklin Cardenas

Kennametal Inc. announced the departure of Mr. Franklin Cardenas from the company. On February 12, 2025, a Separation Agreement was reached, providing Mr. Cardenas with benefits including an annual incentive plan payment, health insurance subsidy for twelve months, and continued vesting of long-term incentive awards until August 15, 2025, following his contractual entitlements.

Kennametal Inc. Announces New Board Member and Dividend

On January 28, 2025, Kennametal Inc. announced the appointment of Doug Dietrich to its Board of Directors, effective February 1, 2025. Dietrich, who is currently the CEO and Chairman of Minerals Technologies Inc., brings over 30 years of industry experience. His strategic, operational, and financial expertise is expected to contribute significantly to Kennametal’s growth and transformation efforts. Additionally, the company declared a quarterly cash dividend of $0.20 per share, payable on February 25, 2025, to shareholders of record as of February 11, 2025.

Kennametal Appoints New VP for Infrastructure Segment

On January 15, 2025, Kennametal Inc. announced the appointment of Faisal Hamadi as Vice President and President of the Infrastructure Business Segment, effective January 20, 2025. Hamadi, who joined Kennametal in July 2024 from Eaton Corporation, will succeed Franklin Cardenas. Hamadi’s appointment aligns with Kennametal’s strategic focus on shareholder value and operational excellence, leveraging his extensive experience in commercial and operations management to drive growth in the Infrastructure segment. Cardenas will continue with the company until April 1, 2025, to ensure a smooth transition.