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what it is
Kennametal makes industrial cutting tools and wear-resistant parts that help factories, miners, and energy companies keep machines running.
how it gets paid
Last year Kennametal made $2.0B in revenue. metal cutting tools was the main engine at $0.82B, or 41% of sales.
why growth slowed
Revenue fell 3.9% last year. The quarter beat consensus after pricing, margin expansion, and broad-based organic growth.
what just happened
Kennametal's latest quarter was a clean beat, with $0.47 EPS on roughly $530M of revenue.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
50/100 earnings predictability — expect surprises
21.6x trailing p/e — priced about right
2.7% dividend yield — cash in your pocket every quarter
9.0% return on capital — nothing to write home about
xvary composite: 73/100 — average
What they do
Kennametal makes industrial cutting tools and wear-resistant parts that help factories, miners, and energy companies keep machines running.
Kennametal sells the stuff your machines burn through when failure is expensive. It gets 60% of sales outside the U.S., and that global reach matters when customers in aerospace, defense, and energy need proven tools fast. Return on capital was 9.0% in the base data, which is decent but not dominant, so this is more durable niche supplier than untouchable empire.
How they make money
$2.0B
annual revenue · their business grew -3.9% last year
metal cutting tools
$0.82B
flat
wear solutions
$0.46B
+10.0%
engineered components
$0.36B
3.9%
advanced materials
$0.22B
flat
aftermarket and services
$0.14B
+10.0%
The products that matter
industrial cutting and wear tooling
Metal-Cutting and Wear-Resistant Tools
$2.0B revenue · -3.9%
this is the whole $2.0B business as presented in the current dataset, and it produced just a 4.5% net margin. That means execution and end-market demand both matter a lot.
4.5% net margin
Key numbers
21.6x
trailing p/e
P/E → how many dollars you pay for one dollar of profit → so what: you are paying a full price for a company with $1.35 to $1.45 in earnings power.
17.0%
operating margin
Operating margin → profit left after running the business → so what: Kennametal is efficient enough to make money, but not efficient enough to ignore a slowdown.
$597M
long-term debt
Debt → money the company owes → so what: this is manageable against $2.0B of revenue, but it still narrows your room for bad quarters.
2.7%
dividend yield
Dividend yield → cash you get while waiting → so what: you are being paid a little, not enough to rescue the trade if the stock rerates lower.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 55 / 100
- long-term debt $597M (21% of capital)
- net profit margin 6.7% — keeps 7 cents of every dollar in revenue
- return on equity 11% — $0.11 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 KMT 3 years ago → it's now worth $13,460.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Kennametal's latest quarter was a clean beat, with $0.47 EPS on roughly $530M of revenue.
The quarter beat consensus after pricing, margin expansion, and broad-based organic growth. The company also raised its fiscal 2026 outlook, which helped fuel the recent rally.
$529.5M
revenue
$0.47
eps
32.8%
gross margin
the number that mattered
$0.47 EPS mattered most because it beat the $0.35 consensus by $0.12, or about 34%, and justified the raised full-year outlook.
-
kennametal’s stock price spiked 38% since our early october review.the run up in the shares was likely fueled by strong fiscal first-quarter results, modest end-market improvements, and positive outlook revisions. share gains in aerospace & defense, earthworks, and power generation, along with pricing and tariff surcharges and early restructuring savings, helped the company achieve share earnings of $0.34 in the september period, which exceeded expectations.
-
investor confidence was bolstered by the raised full-year forecast.on the downside, operational performance may taper in the second half of fiscal 2026 (year ends august 31st).
-
there are signs that volume growth may slow, as pricing and surcharge benefits stabilize.furthermore, persistent inflation, tariffs, and uneven regional demand, particularly in transportation and emea, are also likely to weigh on results.
-
we believe performance will improve over the longer term.prospects for 2027 and beyond hinge on strategic growth initiatives, effective cost control, and welltimed market positioning. kennametal plans to sustain above-market growth by leveraging its strong share in aerospace & defense, earthworks, and power generation, while expanding into renewable and backup energy markets. structural cost improvements and lean manufacturing should enhance margins and offset inflation and tariff pressures. portfolio restructuring, including potential divestitures and/or acquisitions, along with greater capital emphasis on high-growth segments, ought to pay off. meanwhile, a healthy balance sheet, $800 million of liquidity, and disciplined capital allocation, leaves the metallurgist well positioned to convert operational wins into consistent sales, earnings, and free cash flow growth.
-
this timely stock seems best suited to momentum accounts.
source: company earnings report, 2026
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What could go wrong
the #1 risk is end-market demand rolling over in mining, energy, transportation, and industrial production.
med
industrial demand slows
Revenue already fell 3.9% last year. If customer orders weaken again, a business this cyclical does not have much margin for error.
With net margin at 4.5%, even a modest sales decline can hit EPS hard.
med
restructuring savings disappoint
Part of the recent stock rerating came from early savings and better execution. If those savings stall, the market loses one of the cleanest parts of the bull case.
The stock has already run 38% since early October. Expectations are no longer low.
med
pricing fades before volume recovers
Management commentary points to pricing and surcharge benefits stabilizing. If that tailwind fades before unit demand improves, profit can flatten quickly.
Consensus EPS is $1.45 for FY2026. That number matters because the current price already discounts some improvement from $1.35.
med
tariffs, inflation, and regional softness
Transportation and EMEA were called out as weaker spots. Add tariffs and input-cost pressure, and a thin-margin manufacturer can feel the squeeze from both sides.
This pressure reaches essentially the full $2.0B revenue base because the dataset does not show a high-margin segment large enough to offset it.
This is a $2.0B industrial business with a 4.5% net margin. That is enough cushion for a normal quarter, not enough to shrug off a broad capex slowdown.
source: institutional data · regulatory filings · risk analysis
Pay attention to
calendar
next earnings call
You want to hear whether the raised full-year outlook is holding and whether second-half caution is getting better or worse.
metric
fy2026 EPS vs. $1.45
That is the number attached to the current recovery narrative. Miss it, and the recent rerating gets harder to defend.
trend
order trends in aerospace and defense
Those markets are doing some of the heavy lifting in the current bull case. If share gains continue, the story gets more durable.
risk
pricing benefit vs. volume pressure
If pricing and surcharge help fade before demand improves, you will see it in margins first and revenue second.
Analyst rankings
short-term outlook
top 5%
Momentum score 1 is the best rank available. In human-speak, analysts think this stock has stronger near-term price action than almost everything else.
risk profile
average
Stability score 3 means typical risk. Not a bunker stock. Not a chaos machine either.
chart momentum
average
Technical score 3 says the chart is constructive, but not screaming. The move has been good. The signal is not rare.
earnings predictability
50 / 100
Halfway up the scale means earnings can surprise you in either direction. Welcome to cyclical manufacturing.
source: institutional data
Institutional activity
106 buyers vs. 147 sellers in 3q2025. total institutional holdings: 79.5M shares.
source: institutional data
Price targets
3-5 year target range
$13
$37
$29
current price
$25
target midpoint · 14% from current · 3-5yr high: $45 (+55% · 14% ann'l return)
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