Kennametal (NYSE:KMT) Announces Earnings Results, Beats Estimates By $0.83 EPS

Key Points

• Kennametal reported quarterly EPS of $3.48, beating analyst estimates of $2.65; revenue rose 54.3% year over year to $768.19 million, slightly below expectations.
• Results benefited substantially from favorable tungsten price-cost timing. Management expects this benefit to reverse as tungsten prices fall, creating headwinds in the third and fourth quarters.
• Year-to-date free operating cash flow was negative $212 million, driven largely by higher-cost tungsten inventory and supplier advances; the company has paused share repurchases until cash flow turns positive.

Kennametal (NYSE:KMT - Get Free Report) announced its earnings results on Wednesday. The industrial products company reported $3.48 EPS for the quarter, topping analysts' consensus estimates of $2.65 by $0.83, FiscalAI reports. Kennametal had a return on equity of 24.83% and a net margin of 14.53%. The company had revenue of $768.19 million for the quarter, compared to analysts' expectations of $770.36 million. During the same period last year, the firm earned $0.34 EPS. Kennametal's revenue for the quarter was up 54.3% compared to the same quarter last year.

Here are the key takeaways from Kennametal's conference call:

• Kennametal reported first-quarter sales up 54% organically and EPS of $3.48, exceeding the midpoint of its outlook; results were substantially boosted by favorable tungsten price-cost timing. Metal Cutting posted its fourth consecutive quarter of volume growth, with mid-single-digit gains and share capture in key markets.
• Management cited growth initiatives, pricing, lean transformation and portfolio actions as supports for its long-term target of 16%–19% EBITDA margins, assuming tungsten prices remain elevated.
• Infrastructure volumes fell at a low-double-digit rate amid price sensitivity, slower Chinese mining activity and limited product substitution. Management expects only modest recovery in Q2, with most of the anticipated rebound weighted to the second half.
• FY2027 adjusted EPS guidance is $5–$6, including an estimated $0.97 favorable price-cost timing benefit; falling tungsten prices are expected to create headwinds in Q3 and Q4, with Q4 EBITDA margin projected in the low double digits.
• Year-to-date free operating cash flow was negative $212 million, largely due to higher-cost tungsten inventory and supplier advances; inventory value has tripled in 18 months. Share repurchases remain paused until free operating cash flow turns positive.

Kennametal Price Performance

KMT stock traded down $4.46 during mid-day trading on Wednesday, hitting $26.07. The company had a trading volume of 2,417,089 shares, compared to its average volume of 1,403,847. The company has a market capitalization of $1.99 billion, a price-to-earnings ratio of 5.95, a P/E/G ratio of 0.30 and a beta of 1.30. Kennametal has a 12-month low of $24.00 and a 12-month high of $43.81. The company has a quick ratio of 0.98, a current ratio of 2.62 and a debt-to-equity ratio of 0.42. The company has a 50-day moving average price of $30.44 and a 200 day moving average price of $34.56.

Kennametal Announces Dividend

The business also recently declared a quarterly dividend, which will be paid on Monday, November 23rd. Shareholders of record on Monday, November 9th will be issued a $0.20 dividend. This represents a $0.80 dividend on an annualized basis and a yield of 3.1%. The ex-dividend date is Monday, November 9th. Kennametal's payout ratio is currently 18.18%.

Key Kennametal News

Here are the key news stories impacting Kennametal this week:

• Positive Sentiment: Fiscal Q1 adjusted earnings were $3.48 per share, above analysts’ roughly $2.65 estimate and up from $0.34 a year earlier. Kennametal also raised its FY27 adjusted-EPS outlook. Kennametal Boosts FY27 Adj. EPS Outlook
• Positive Sentiment: Sales rose 54% to about $768 million, with the company citing stronger Metal Cutting volumes; it also reaffirmed a target for 16%–19% adjusted EBITDA margins beyond FY27, assuming tungsten prices remain at current levels. Kennametal Announces Fiscal 2027 First Quarter Results
• Negative Sentiment: Quarterly sales came in slightly below analyst expectations ($768.19 million versus about $770 million). The company said results were helped primarily by favorable timing of raw-material-related pricing compared with costs, which may make investors question how durable the earnings strength is. Kennametal Reports Sales Below Analyst Estimates

Analyst Upgrades and Downgrades

A number of research analysts recently weighed in on the stock. Weiss Ratings cut shares of Kennametal from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Friday, October 23rd. UBS Group cut their price target on Kennametal from $39.00 to $35.00 and set a "neutral" rating for the company in a research note on Monday, August 10th. DA Davidson decreased their price target on Kennametal from $34.00 to $30.00 and set a "neutral" rating on the stock in a report on Tuesday, August 11th. JPMorgan Chase & Co. decreased their price target on Kennametal from $34.00 to $30.00 and set an "underweight" rating on the stock in a report on Thursday, October 8th. Finally, Zacks Research downgraded Kennametal from a "strong-buy" rating to a "hold" rating in a research report on Wednesday, October 14th. Five research analysts have rated the stock with a Hold rating and four have given a Sell rating to the company's stock. According to MarketBeat, the company has a consensus rating of "Reduce" and an average price target of $33.50.

Insider Transactions at Kennametal

In related news, VP Judith L. Bacchus sold 9,676 shares of the business's stock in a transaction dated Tuesday, September 8th. The stock was sold at an average price of $30.29, for a total value of $293,086.04. Following the sale, the vice president directly owned 15,721 shares in the company, valued at approximately $476,189.09. The trade was a 38.10% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, CEO Sanjay Chowbey purchased 7,000 shares of the company's stock in a transaction that occurred on Thursday, September 10th. The shares were purchased at an average cost of $29.10 per share, with a total value of $203,700.00. Following the completion of the purchase, the chief executive officer owned 246,839 shares of the company's stock, valued at $7,183,014.90. The trade was a 2.92% increase in their position. Additional details regarding this purchase are available in the official SEC disclosure. Company insiders own 1.65% of the company's stock.

Kennametal Company Profile

Kennametal Inc NYSE: KMT is a global industrial technology company that develops and manufactures tooling, engineered components and wear-resistant solutions. Its products are designed to help customers improve productivity, durability and performance in demanding manufacturing and industrial applications.

The company's offerings include metal-cutting tools and systems, tooling components, advanced materials, and products made with hard metals and other wear-resistant technologies. Kennametal also provides engineered solutions for applications such as machining, earthworks, energy production, transportation, aerospace, defense and general engineering.

Founded in 1938 by Philip M.

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