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what it is
Kadant sells paper and recycling equipment, then keeps getting paid when customers need the parts to keep it running.
how it gets paid
Last year Kadant made $1.1B in revenue. aftermarket parts and consumables was the main engine at $0.76B, or 69% of sales.
why growth slowed
Revenue fell 0.1% last year. The 69% aftermarket mix mattered most because it explains why Kadant can keep posting solid profits even when macro noise freezes new equipment orders.
what just happened
Kadant posted $2.27 in Q4 2025 EPS, above the $2.15 consensus, as aftermarket demand kept the engine running.
At a glance
B+ balance sheet — decent shape, but not bulletproof
85/100 earnings predictability — you can trust these numbers
31.9x trailing p/e — you're paying up for this one
0.5% dividend yield — cash in your pocket every quarter
13.5% return on capital — nothing to write home about
xvary composite: 59/100 — below average
What they do
Kadant sells paper and recycling equipment, then keeps getting paid when customers need the parts to keep it running.
Kadant wins because its equipment ends up deep inside a customer's mill, where downtime is expensive and replacement is worse. Aftermarket mix hit 69% of Q3 2025 sales, up from 65% a year earlier. Switching costs (changing suppliers) → ripping out working equipment and retraining your crew → so what: once this stuff is in your plant, your cheapest move is usually buying more Kadant parts.
How they make money
$1.1B
annual revenue · their business grew -0.1% last year
aftermarket parts and consumables
$0.76B
+0.0%
stock-preparation systems
$0.13B
+5.5%
fluid-handling systems
$0.09B
+5.5%
paper machine accessory equipment
$0.07B
+0.0%
water-management systems
$0.06B
+5.5%
The products that matter
process equipment and replacement parts
Papermaking and industrial process equipment
$1.1B revenue · flat sales
it's the full $1.1B business, but the number to watch is mix: aftermarket parts were about 65% of annual revenue and 69% in the september quarter. that's what cushions margins when customers delay larger equipment orders.
mix matters
Key numbers
69%
aftermarket mix
This tells you Kadant is not living quarter to quarter on new machine orders. Most of the money comes from customers keeping existing lines running.
22.5%
operating margin
Operating margin → profit left after running the business → so what: Kadant keeps about $22.50 from every $100 of sales before interest and taxes.
31.9x
trailing p/e
P/E → price compared with last year's profit → so what: you are paying a premium price for a company expected to grow sales 5.5% in 2026.
13.5%
return on capital
Return on capital → profit earned on money invested in the business → so what: Kadant is solid, but this is not a license to pay any price.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 60 / 100
- long-term debt $255M (7% of capital)
- net profit margin 12.4% — keeps 12 cents of every dollar in revenue
- return on equity 14% — $0.14 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in KAI 3 years ago → it's now worth $16,960.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Kadant posted $2.27 in Q4 2025 EPS, above the $2.15 consensus, as aftermarket demand kept the engine running.
Q4 2025 revenue reached a record $286.2 million, up from $258.0 million a year earlier, according to the company earnings release. The quiet part: flat equipment demand matters less when replacement parts keep showing up.
$286.2M
revenue
$2.27
eps
22.5%
operating margin
the number that mattered
The 69% aftermarket mix mattered most because it explains why Kadant can keep posting solid profits even when macro noise freezes new equipment orders.
-
kadant inc. continued to be affected by macroeconomic uncertainties in the 2025 third quarter.
-
sales came in flat, vs. prior year, at $271.6 million.but this exceeded our $260 million estimate, largely due to acquisition-related initiatives that offset organic weakness.
-
demand for aftermarket parts continued to be strong.
-
in fact, those products accounted for 69% of the top line (from 65% in the prior year) in the september period.but customers remained hesitant to install new, bigger machines amidst the ongoing global trade uncertainties. nonetheless, share earnings came in better than expected, at $2.59 (our estimate was set at $2.20), as aftermarket parts tend to carry higher margins. on october 7th, kadant acquired clyde industries, a specialist in boiler efficiency and cleaning technologies, for $175 million in cash. prior to the deal, clyde industries reported about $92 million in annual sales (for the fiscal year ended february 28, 2025) and employed about 400 people, with operations in u.s., brazil, china, indonesia, finland, and canada.
-
the business will be reported within kadant’s industrial processing segment.this expands kadant’s presence in adjacent areas like power generation and biomass/energy recovery.
source: company earnings report, 2026
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What could go wrong
the top risk is delayed capital-equipment orders in papermaking and process systems. kadant's parts business adds resilience, but the company still needs customers to approve larger installs.
med
new machine demand stays soft
management has already flagged customer hesitation around bigger installations. if that continues, the pressure lands on the roughly 35% of revenue not protected by aftermarket demand.
impact: the parts mix can cushion profit, but it cannot fully replace a real order cycle.
med
the clyde acquisition has to earn its keep
kadant paid $175M in cash for a business with about $92M in annual sales and roughly 400 employees. the strategic logic is clear. integration still has to work in practice.
impact: if margins slip or cross-selling fails to show up, the deal becomes more expensive than it looks today.
med
31.9x earnings leaves less room for a stumble
the stock trades at a premium multiple even though annual revenue was basically flat at $1.1B. if EPS stalls around $9.15 instead of moving toward the $10.35 estimate, the valuation argument gets thinner fast.
impact: this is the classic good-business, expensive-stock problem.
between the roughly 35% of sales tied to more cyclical equipment demand and a 31.9x trailing multiple, kadant does not have much room for operational wobble.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next report timing
watch for the next quarterly update in late april 2026. this is where you find out whether the parts-heavy mix is still doing the heavy lifting.
trend
aftermarket mix above 65%
it ran at about 65% for the year and 69% in the september quarter. if that slips, the margin cushion slips with it.
metric
fy2026 EPS versus $10.35
that estimate is what helps justify a forward multiple near 28x. cuts here matter more than small revenue noise.
risk
clyde integration and order appetite
the $175M deal adds growth options, but it does not remove the risk that customers keep delaying larger equipment purchases.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts see no strong near-term edge either way.
risk profile
average
stability score 3 — this is neither a bunker stock nor a chaos stock.
chart momentum
below average
technical score 4 — the tape is not giving you much help right now.
earnings predictability
85 / 100
management has been fairly reliable. the surprise is usually in the mix, not in total chaos.
source: institutional data
Institutional activity
126 buyers vs. 156 sellers in 3q2025. total institutional holdings: 13.2M shares.
source: institutional data
Price targets
3-5 year target range
$221
$487
$292
current price
$354
target midpoint · +21% from current · 3-5yr high: $500 (+70% · 15% ann'l return)
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