Shares of Kadant Inc. (KAI Quick QuoteKAI - Free Report) have jumped an impressive 16.2% in the past three months. Shareholders’ rewards, buyouts and improved projections have enhanced the company’s attractiveness and supported the market’s positive sentiment. It presently sports a Zacks Rank #1 (Strong Buy).

The company manufactures and provides components and engineered systems mainly for use in the process industries. Kadant belongs to the Zacks Manufacturing - General Industrial industry, which is in the top 27% (with a rank of 69) of more than 250 Zacks industries. It is based in Westford, MA, and has a market capitalization of $2.4 billion.

In the past three months, the industry has declined 7.7%. The S&P 500 has gained 0.5% during the same period and the Zacks Industrial Products sector has declined 3.7%.

Image Source: Zacks Investment Research

Factors Influencing the Stock

In the past three months, Kadant delivered impressive results for the second quarter of 2021. Its earnings surpassed the Zacks Consensus Estimate by 33.11% and increased 89.6% from the year-ago quarter. Healthy sales growth and margin improvements supported bottom-line growth.

In addition to solid financial performance, Kadant’s exposure in diversified end markets (including mining, packaging, metals and others), solid product offerings, infrastructural development and solid demand for sustainable materials are tailwinds for the quarters ahead. Economic recovery, growing e-commerce businesses and efforts to boost digital capabilities are beneficial as well.

For 2021, Kadant anticipates revenues of $783-$793 million, up from $710-$730 million mentioned previously. The company’s commitment toward returning values to shareholders raises its appeal. It is due to pay the quarterly dividend of 25 cents per share in November.

Regarding buyout actions, Kadant acquired a manufacturer of balers and other automated waste-handling equipment, Balemaster, for $54 million in August. Also, Kadant added Joh. Clouth GmbH & Co. KG along with its affiliates to its portfolio in the third quarter of 2021.

The Zacks Consensus Estimate for Kadant’s earnings per share is pegged at $7.41 for 2021 and $8.81 for 2022, marking increases of 6.6% and 10.7% from the respective 60-day-ago figures. The consensus estimate for third-quarter earnings improved from $1.56 per share to $1.64. Such upward revisions in earnings estimates are reflective of healthy operating conditions for the company.