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Kennametal Inc. (KMT)
NYSE:KMT
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Kennametal
(NYSE:KMT)
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Rating:65Neutral
Price Target:
$41.00
▲(6.91% Upside)
The score is driven primarily by steady (but not accelerating) financial performance and constructive guidance/language on pricing, outlook, and liquidity. This is tempered by overbought technical conditions and a less compelling valuation, with tungsten-driven working-capital pressure a notable near-term risk.
Positive Factors
Market leadership & product breadth
Kennametal’s broad product portfolio and leadership in tooling and wear-resistant materials create durable competitive advantages across diversified end markets. This entrenched position supports repeat OEM and aftermarket revenue, long-term contracts, and cross-selling opportunities that stabilize revenue over cycles.
Healthy liquidity and manageable leverage
Strong available liquidity and a long-dated revolver provide financial flexibility to fund capex, working capital shocks, and restructuring without urgent refinancing risk. Reasonable leverage (D/E ~0.46) and covenant headroom support strategic investments and buffer cyclical end-market swings.
Demonstrated pricing power
Consistent ability to implement material price and tariff surcharges shows sustained commercial pricing power vs raw-cost inflation. This structural capability preserves margins over time and allows the firm to pass through commodity cost shocks, supporting margin stability when executed across contracts.
Negative Factors
Tungsten price volatility
Large, unpredictable swings in tungsten elevate working capital requirements and raw-material cost pass-through timing differences. This structural input volatility can compress cash conversion, force accelerated pricing actions that lag contracts, and raise earnings variability over multi-quarter horizons.
Moderate and choppy cash generation
Although generating positive FCF, cash conversion is inconsistent and materially below earnings in some years. This uneven cash quality constrains the firm’s ability to fund buybacks, sustained dividends, or rapid M&A without tapping liquidity, especially during raw-material-driven working-capital spikes.
Margin compression and uneven revenue growth
Revenue growth is modest and margins have compressed from earlier peaks, indicating limited operating leverage and tougher pricing or cost pressures in parts of the portfolio. Over time, stagnant top-line expansion and margin normalization cap upside on profitability absent structural cost or product mix improvements.
Kennametal (KMT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.92B
Dividend Yield2.74%
Average Volume (3M)880.80K
Price to Earnings (P/E)25.0
Beta (1Y)0.78
Revenue Growth-2.63%
EPS Growth-4.46%
CountryUS
Employees8,400
SectorGeneral
Sector StrengthN/A
IndustryManufacturing - Tools & Accessories
Share Statistics
EPS (TTM)0.47
Shares Outstanding76,093,140
10 Day Avg. Volume1,074,197
30 Day Avg. Volume880,805
Financial Highlights & Ratios
PEG Ratio-1.55
Price to Book (P/B)1.38
Price to Sales (P/S)0.90
P/FCF Ratio14.86
Enterprise Value/Market Cap1.16
Enterprise Value/Revenue1.66
Enterprise Value/Gross Profit5.35
Enterprise Value/Ebitda11.88
Forecast
1Y Price Target
$32.79Price Target Upside-14.50% Downside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Kennametal Business Overview & Revenue Model
Company DescriptionKennametal 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 MoneyKennametal generates revenue through the sale of its products, which include cutting tools, industrial components, and wear-resistant materials. The company's revenue model is primarily based on direct sales to end-users in various industries, as well as through distribution partners. Key revenue streams include sales of cutting tools and tooling systems, which are critical in machining operations, and specialized services that enhance tool performance and lifespan. Additionally, Kennametal benefits from long-term contracts and partnerships with large manufacturers, providing a stable revenue base. The company also invests in research and development to innovate and expand its product offerings, ensuring they meet the evolving needs of their customers, which contributes to sustained earnings growth.
Kennametal Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The call presents a generally positive operational and financial picture: management raised full‑year sales guidance, expects meaningful price realization (~11% FY, ~13% Q3) and sizable EPS timing benefits (≈$0.95 YoY), and maintains strong liquidity (~$779M available). At the same time, significant tungsten price volatility has created working capital pressure and some timing distortions to volumes (Q2 buy‑ahead) and deferred some EMEA savings into later periods. The positive impacts from pricing, cost actions, commercial wins, and a healthy balance sheet outweigh the near‑term headwinds related to raw‑material volatility and restructuring timing.Q2-2026 Updates
Positive Updates
Raised Full-Year Sales Outlook
FY2026 sales guidance increased to $2.19B–$2.25B, reflecting additional pricing actions tied to rising tungsten costs and an expected net price and tariff surcharge of ~11% with ~2% FX tailwind.
Strong EPS and Timing Benefits
Updated adjusted EPS guidance of $2.45–$2.50 includes an approximate $0.95 year‑over‑year benefit related to the timing of price realization versus raw material costs; Q3 adjusted EPS guided to $0.50–$0.60 and includes ~$0.30 YoY PriceRock timing benefit.
Healthy Liquidity and Balance Sheet
Combined cash and revolver availability of about $779M; revolver capacity $650M (matures Nov 2030); company reports being well within financial covenants and no near‑term debt refinancing requirements.
Pricing Realization and Volume Improvements
Company expects price and tariff realization of ~13% in Q3; full‑year volumes guided flat to +3% (management referenced a current full‑year volume projection around ~1.5%) and noted sequential improvement (Q1 ~-1%, Q2 ~flat after a ~$13M buy‑ahead, Q3 midpoint adjusted to +1%).
Operational and Cost Actions
Updated outlook includes $30M of savings tied to restructuring actions; management reiterated broader structural cost improvement and lean transformation initiatives with an objective to reach higher run‑rate savings (management referenced a targeted run‑rate near $125M by end of next fiscal year).
Commercial Wins and Market Positioning
Management highlighted project wins across commercial segments including aerospace & defense share gains, mining (Earthworks) wins, energy (including power generation for AI data centers), and new product/partner initiatives in general engineering and digital machining.
Supply Confidence and Sourcing Diversity
Despite sharp tungsten price increases, the company reports diversified sourcing (including recycled material and a Bolivia facility), long‑term supplier agreements, limited dependence on Chinese material outside China, and confidence in meeting near‑term supply needs.
Cash Flow and Capex
Capex guidance unchanged; free operating cash flow expected to be approximately 60% of adjusted net income (reflecting additional working capital needs due to rising tungsten costs).
Negative Updates
Severe Tungsten Price Volatility
Tungsten prices surged materially (management referenced up ~33% year‑to‑date in discussion and a sharp January move of nearly $340), creating working capital pressure, accelerating price surcharges, and adding uncertainty about future raw‑material cost dynamics.
Working Capital and Cash Flow Headwind
Rising tungsten costs increased working capital requirements and were specifically cited as the reason the free cash flow outlook reflects a reduction (free operating cash flow tied to ~60% of adjusted net income) and required additional working capital vs prior assumptions.
Buy‑Ahead and Volume Distortion
A ~$13M customer buy‑ahead in Q2 distorted volumes and sequencing (company noted Q2 would be flat after adjusting for buy‑ahead and Q3 midpoint adjusted to +1%); Q3 volume guidance still negative to flat (-4% to flat) prior to adjustment.
EMEA Restructuring Delays
Some EMEA restructuring actions will take longer than expected to execute, limiting near‑term cost realization; updated guidance only includes $30M of the anticipated savings this year.
Mixed End‑Market Demand
Transportation (auto ex China) remains soft overall with regional variability (EMEA slightly negative, APAC improved, Americas essentially flat); certain commercial programs (e.g., EV stocking orders) have had uneven take‑off and pressurized comps in pockets like Earthworks where some wins have been price driven.
Potential Pricing Lag and Competitive Pressure
Metal‑cutting list price adjustments typically lag by ~3 months, creating exposure to rapid tungsten moves; management acknowledged active competition across end markets and that some wins and market share gains may be price sensitive.
Company Guidance
Management updated FY‑2026 guidance to sales of $2.19–$2.25 billion, volume flat to +3%, net price plus tariff surcharge of ~11% and an approximate 2% FX tailwind, with adjusted EPS of about $2.45–$2.50 (including ~ $0.95 of year‑over‑year benefit from timing of price/raw material costs); they said D&A, FX and pension assumptions are unchanged, capex is unchanged, free operating cash flow is expected to be ~60% of adjusted net income, and the range reflects $30 million of EMEA restructuring savings. For Q3 they guide sales of $545–$565 million, volumes −4% to 0% (adjusted for Q2 buy‑ahead of roughly $13 million the midpoint would be +1%), price/tariff realization ≈13%, FX +5%, and adjusted EPS $0.50–$0.60 (including ~ $0.30 benefit from PriceRock timing; last year’s Q3 included a $0.13 advanced‑manufacturing tax‑credit benefit). On the balance sheet they have a $650 million revolver maturing November 2030, combined cash and revolver availability of ~ $779 million at quarter‑end and remain well within covenants; the outlook incorporates additional pricing actions in response to sharply higher tungsten costs (January list actions were mid‑single digits) and assumes tungsten stabilizes from current elevated levels.Kennametal Financial Statement Overview
Summary
Steady but not accelerating fundamentals: modest TTM revenue growth (~2.4%) and solid profitability (gross margin ~31%, EBITDA margin ~15%), with reasonable leverage (D/E ~0.46). Offsetting this, margins are below 2022 peaks and cash-flow quality is only moderate (FCF ~55% of net income) with choppy multi-year cash performance.Income Statement
TTM (Trailing-Twelve-Months) revenue grew ~2.4% and profitability remains solid (gross margin ~31%, EBITDA margin ~15%). However, margins are below the stronger levels seen in 2022 (notably higher net and EBITDA margins then), and the multi-year trend shows some compression and uneven growth, with annual revenue slightly down in 2024 and 2025 versus prior years.67
Positive
Balance Sheet
Leverage looks reasonable for the industry, with debt-to-equity improving to ~0.46 in TTM (Trailing-Twelve-Months) from roughly ~0.50–0.53 in recent annual periods. Equity is sizable relative to assets and return on equity is stable around the high-single-digits in TTM, though it remains below the stronger 2022 level, suggesting profitability has normalized rather than accelerated.72
Positive
Cash Flow
Cash generation is positive with TTM (Trailing-Twelve-Months) free cash flow of ~$99M and ~7% growth, but cash conversion is only moderate: free cash flow is ~55% of net income and operating cash flow is relatively light versus earnings in TTM. Annual cash flow has also been somewhat choppy (stronger in 2023–2024, weaker in 2022 and down again in 2025), which tempers overall quality.61
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.97B | 2.05B | 2.08B | 2.01B | 1.84B |
| Gross Profit | 598.07M | 627.09M | 646.44M | 647.98M | 552.48M |
| EBITDA | 293.43M | 305.61M | 322.14M | 364.32M | 237.52M |
| Net Income | 93.13M | 109.32M | 118.46M | 144.62M | 54.43M |
Balance Sheet | |||||
| Total Assets | 2.55B | 2.50B | 2.55B | 2.57B | 2.67B |
| Cash, Cash Equivalents and Short-Term Investments | 140.54M | 127.97M | 106.02M | 85.59M | 154.05M |
| Total Debt | 643.36M | 645.75M | 639.42M | 663.28M | 651.49M |
| Total Liabilities | 1.22B | 1.22B | 1.23B | 1.28B | 1.30B |
| Stockholders Equity | 1.28B | 1.25B | 1.28B | 1.25B | 1.33B |
Cash Flow | |||||
| Free Cash Flow | 119.35M | 169.55M | 163.56M | 84.52M | 108.38M |
| Operating Cash Flow | 208.32M | 277.11M | 257.94M | 181.44M | 235.68M |
| Investing Cash Flow | -61.83M | -109.43M | -89.23M | -94.94M | -122.98M |
| Financing Cash Flow | -133.92M | -141.75M | -143.11M | -150.74M | -574.25M |
Kennametal Technical Analysis
Positive
38.35
Price Trends
30.58
Positive
26.63
Positive
24.16
Positive
Market Momentum
1.78
Negative
82.89
Negative
77.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMT, the sentiment is Positive. The current price of 38.35 is above the 20-day moving average (MA) of 33.76, above the 50-day MA of 30.58, and above the 200-day MA of 24.16, indicating a bullish trend. The MACD of 1.78 indicates Negative momentum. The RSI at 82.89 is Negative, neither overbought nor oversold. The STOCH value of 77.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KMT.
Kennametal Risk Analysis
Kennametal disclosed 9 risk factors in its most recent earnings report. Kennametal reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kennametal Peers Comparison
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $19.91B | 19.83 | 17.96% | 2.52% | 0.24% | -1.85% | |
77 Outperform | $15.73B | 29.06 | 38.11% | 1.22% | 3.27% | 10.89% | |
77 Outperform | $16.34B | 63.06 | 8.54% | ― | 8.27% | 19.06% | |
69 Neutral | $6.90B | 23.39 | 9.60% | 1.61% | -1.01% | -12.13% | |
65 Neutral | $2.92B | 25.03 | 8.70% | 2.74% | -2.63% | -4.46% | |
65 Neutral | $13.11B | 30.60 | ― | 4.42% | -1.40% | ― | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% |
* General Sector Average
KMT
Kennametal
38.35
17.15
80.91%
LECO
Lincoln Electric Holdings
285.82
94.64
49.51%
RBC
RBC Bearings
516.78
151.44
41.45%
SNA
Snap-on
382.91
52.09
15.75%
SWK
Stanley Black & Decker
84.63
2.55
3.11%
TKR
Timken Company
98.99
19.16
24.01%
Kennametal Corporate Events
Dividends
Kennametal Board Declares Quarterly Cash Dividend for Shareholders
Positive
Jan 30, 2026
On January 27, 2026, Kennametal Inc.’s board of directors declared a quarterly cash dividend of $0.20 per share, payable on February 24, 2026, to shareholders of record at the close of business on February 10, 2026. The dividend declaration underscores the company’s ongoing commitment to returning capital to shareholders and may signal confidence in its financial position and cash-generating ability during this period.
The most recent analyst rating on (KMT) stock is a Sell with a $28.00 price target. To see the full list of analyst forecasts on Kennametal stock, see the KMT Stock Forecast page.
Private Placements and Financing
Kennametal Announces New Financial Obligation Agreement
Neutral
Nov 19, 2025
The news release from Kennametal does not provide specific details about the company’s industry, products, or market focus. The release references an agreement, but lacks further context or information about its impact on the company’s operations or industry positioning.
The most recent analyst rating on (KMT) stock is a Hold with a $28.00 price target. To see the full list of analyst forecasts on Kennametal stock, see the KMT 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.