Kennametal (NYSE:KMT) Shares Gap Down on Disappointing Earnings

Key Points

• Kennametal's share price experienced a significant drop, opening at $20.84 after closing at $25.13 due to weaker than expected earnings, with earnings per share (EPS) at $0.34, missing estimates by $0.06.
• The company has declared a quarterly dividend of $0.20 per share, which will be paid on August 26th, translating to an annualized dividend yield of 4.3%.
• Analysts have mixed ratings on Kennametal, with a recent upgrade from Wall Street Zen to a "buy" rating, while the average target price stands at $25.40 from various analysts.

Kennametal Inc. (NYSE:KMT - Get Free Report)'s stock price gapped down prior to trading on Wednesday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $25.13, but opened at $20.84. Kennametal shares last traded at $18.68, with a volume of 580,088 shares changing hands.

The industrial products company reported $0.34 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $0.40 by ($0.06). Kennametal had a net margin of 4.73% and a return on equity of 8.09%. The business had revenue of $516.45 million for the quarter, compared to analysts' expectations of $527.52 million. During the same period last year, the business earned $0.49 earnings per share. The company's revenue was down 4.9% on a year-over-year basis.

Kennametal Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Tuesday, August 26th. Investors of record on Tuesday, August 12th will be paid a $0.20 dividend. The ex-dividend date is Tuesday, August 12th. This represents a $0.80 dividend on an annualized basis and a yield of 4.0%. Kennametal's payout ratio is presently 66.67%.

Wall Street Analysts Forecast Growth

Several research analysts have recently issued reports on the stock. Loop Capital reiterated a "hold" rating and issued a $24.00 target price (up previously from $21.00) on shares of Kennametal in a research note on Wednesday, June 25th. Wall Street Zen upgraded shares of Kennametal from a "hold" rating to a "buy" rating in a research note on Friday, May 16th. JPMorgan Chase & Co. dropped their target price on shares of Kennametal from $23.00 to $20.00 and set an "underweight" rating on the stock in a research note on Thursday. Barclays upped their target price on shares of Kennametal from $22.00 to $24.00 and gave the stock an "equal weight" rating in a research note on Monday, May 12th. Finally, Morgan Stanley upped their target price on shares of Kennametal from $20.00 to $21.00 and gave the stock an "equal weight" rating in a research note on Monday, May 12th. Two investment analysts have rated the stock with a sell rating, four have given a hold rating and one has issued a buy rating to the company. According to MarketBeat.com, the stock currently has an average rating of "Hold" and an average target price of $24.50.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in KMT. LPL Financial LLC lifted its position in Kennametal by 29.3% during the fourth quarter. LPL Financial LLC now owns 17,566 shares of the industrial products company's stock valued at $422,000 after purchasing an additional 3,978 shares during the period. JPMorgan Chase & Co. lifted its position in Kennametal by 29.4% during the fourth quarter. JPMorgan Chase & Co. now owns 313,785 shares of the industrial products company's stock valued at $7,537,000 after purchasing an additional 71,346 shares during the period. O Shaughnessy Asset Management LLC lifted its position in Kennametal by 21.4% during the fourth quarter. O Shaughnessy Asset Management LLC now owns 11,229 shares of the industrial products company's stock valued at $270,000 after purchasing an additional 1,977 shares during the period. Alliancebernstein L.P. lifted its position in Kennametal by 8.5% during the fourth quarter. Alliancebernstein L.P. now owns 94,154 shares of the industrial products company's stock valued at $2,262,000 after purchasing an additional 7,400 shares during the period. Finally, Wells Fargo & Company MN lifted its position in Kennametal by 14.5% during the fourth quarter. Wells Fargo & Company MN now owns 58,316 shares of the industrial products company's stock valued at $1,401,000 after purchasing an additional 7,377 shares during the period.

Kennametal Trading Up 1.3%

The company has a market cap of $1.54 billion, a P/E ratio of 16.85, a P/E/G ratio of 2.73 and a beta of 1.44. The stock's 50-day moving average is $23.34 and its two-hundred day moving average is $21.96. The company has a debt-to-equity ratio of 0.45, a current ratio of 2.46 and a quick ratio of 1.10.

Kennametal Company Profile

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.