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Reasons Why You Should Hold Kennametal Stock in Your Portfolio Now
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Kennametal Inc. (KMT - Free Report) is poised to benefit from solid momentum in aerospace, defense and transportation end markets in the quarters ahead. Growth in production for light vehicle and hybrid project wins bode well for the company. It is witnessing several positive trends in its key end markets that hold promise for long-term growth.
The trends include an increase in U.S. and international defense spending volumes, digitalization and recovery in the transportation end market. For fiscal 2025 (ending June 2025), the company expects revenues from aerospace and defense and transportation markets to increase on a year-over-year basis.
Kennametal’s well-diversified portfolio and investments in product development offer it a competitive edge over its peers. Some of its notable products are TopSwiss Inserts, HARVI TE Duo-Lock, KSEM ST Line, Through Coolant ER Collets, FV Geometry Inserts and Chip Fan.
The company also remains committed to rewarding its shareholders through dividend payments and share buybacks. In fiscal 2024 (ended June 2024), Kennametal distributed dividends worth $63.4 million and repurchased shares worth $65.4 million. Also, in fiscal 2023 (ended June 2023), it distributed dividends totaling $65 million to its shareholders and bought back shares worth $49 million.
It’s worth noting that in February 2024, Kennametal’s board of directors authorized a share repurchase program worth $200 million, which will remain valid for three years. Since the inception of its first share repurchase program, the company has repurchased 7.3 million shares for $200 million.
KMT Stock’s Price Performance
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) company has gained 9.5% against the industry’s 2.7% decline.
However, lower volume in general engineering, energy and earthwork end markets, owing to declines in industrial activity and decreased underground mining and road construction activities in the United States, is affecting the Infrastructure segment.
The Infrastructure segment’s revenues declined 2% year over year in the fourth quarter of fiscal 2024. The company expects revenues to be in the range of $2.0-$2.1 billion for the fiscal year, implying a year-over-year decrease of 1.4% at the midpoint.
KMT has been witnessing the adverse impacts of high operating expenses. In fiscal 2024, the company’s operating margin decreased 100 basis points due to headwinds from higher wages and general inflation.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
FLS delivered a trailing four-quarter average earnings surprise of 18.2%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2024 earnings has increased 3.8%.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.2%.
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Reasons Why You Should Hold Kennametal Stock in Your Portfolio Now
Kennametal Inc. (KMT - Free Report) is poised to benefit from solid momentum in aerospace, defense and transportation end markets in the quarters ahead. Growth in production for light vehicle and hybrid project wins bode well for the company. It is witnessing several positive trends in its key end markets that hold promise for long-term growth.
The trends include an increase in U.S. and international defense spending volumes, digitalization and recovery in the transportation end market. For fiscal 2025 (ending June 2025), the company expects revenues from aerospace and defense and transportation markets to increase on a year-over-year basis.
Kennametal’s well-diversified portfolio and investments in product development offer it a competitive edge over its peers. Some of its notable products are TopSwiss Inserts, HARVI TE Duo-Lock, KSEM ST Line, Through Coolant ER Collets, FV Geometry Inserts and Chip Fan.
The company also remains committed to rewarding its shareholders through dividend payments and share buybacks. In fiscal 2024 (ended June 2024), Kennametal distributed dividends worth $63.4 million and repurchased shares worth $65.4 million. Also, in fiscal 2023 (ended June 2023), it distributed dividends totaling $65 million to its shareholders and bought back shares worth $49 million.
It’s worth noting that in February 2024, Kennametal’s board of directors authorized a share repurchase program worth $200 million, which will remain valid for three years. Since the inception of its first share repurchase program, the company has repurchased 7.3 million shares for $200 million.
KMT Stock’s Price Performance
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) company has gained 9.5% against the industry’s 2.7% decline.
However, lower volume in general engineering, energy and earthwork end markets, owing to declines in industrial activity and decreased underground mining and road construction activities in the United States, is affecting the Infrastructure segment.
The Infrastructure segment’s revenues declined 2% year over year in the fourth quarter of fiscal 2024. The company expects revenues to be in the range of $2.0-$2.1 billion for the fiscal year, implying a year-over-year decrease of 1.4% at the midpoint.
KMT has been witnessing the adverse impacts of high operating expenses. In fiscal 2024, the company’s operating margin decreased 100 basis points due to headwinds from higher wages and general inflation.
Stocks to Consider
Some better-ranked companies from the same space are discussed below.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 18.2%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2024 earnings has increased 3.8%.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.2%.