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Here's Why You Should Consider Investing in Kennametal (KMT)

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Kennametal Inc. (KMT - Free Report) currently boasts promising prospects on strength in its end markets, solid product portfolio, innovations capabilities, and a sound capital-deployment strategy.

Zacks Investment ResearchImage Source: Zacks Investment Research

The Zacks Rank #2 (Buy) company has a market capitalization of $2.9 billion. In the past year, it has gained 2.9% against the industry’s decline of 4.7%.

Let’s delve into the factors that make the company a smart investment choice at the moment.

Solid End Markets: Kennametal has been benefiting from an improvement in demand for its products across aerospace, energy, and general engineering end markets. In the fourth quarter of fiscal 2021 (ended Jun 30, 2021) the company generated revenues of $516 million, reflecting an increase of 36.1% on a year-over-year basis. In the quarters ahead, it anticipates gaining from its strong product offerings, innovation capabilities, operational excellence, and healthy cash flow.

Initiatives: The company’s three initiatives — growth, modernization, and simplification — have been proving beneficial over time. Kennametal’s growth initiative is aiding sales through improvement in commercial execution. Its simplification initiative is boosting operational efficiency and reducing costs while the modernization initiative has been contributing to solid operating leverage. The simplification/ modernization initiatives yielded savings of $186 million at the end of fiscal fourth quarter.

Rewards to Shareholders: It remains committed to rewarding shareholders through share-buyback programs and dividend payouts. In fiscal 2021, the company paid out dividends worth $67 million. Also, Kennametal’s board of directors approved a share buyback worth $200 million in August 2021, which will remain valid for three years.

Estimate Trend: In the past 60 days, the Zacks Consensus Estimate for the company’s fiscal 2022 (ending June 2022) earnings has trended up from $1.94 to $1.96 on one upward estimate revision versus none downward. Also, over the same timeframe, the consensus estimate for fiscal 2023 (ending June 2023) earnings has increased from $2.46 to $2.50 on one upward estimate revision versus none downward.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Industrial Products sector are Alcoa Corporation (AA - Free Report) , Stanley Black & Decker, Inc. (SWK - Free Report) , Standex International Corporation (SXI - Free Report) . While Alcoa currently sports a Zacks Rank #1 (Strong Buy), Stanley Black and Standex carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa pulled off an earnings surprise of 42.70%, on average, in the trailing four quarters.

Stanley Black pulled off an earnings surprise of 11.87%, on average, in the trailing four quarters.

Standex pulled off an earnings surprise of 10.52%, on average, in the trailing four quarters.