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Reasons Why You Should Avoid Betting on Kennametal (KMT) Now
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Kennametal Inc. (KMT - Free Report) failed to impress investors with its recent operational performance due to tough end-market conditions and other challenges, which are likely to adversely impact its earnings.
Image Source: Zacks Investment Research
The currently Zacks Rank #4 (Sell) player has a market capitalization of $2.2 billion. Due to the above-mentioned woes, the stock has lost 19.3% compared with the industry’s decline of 25.4% in the past six months.
Let’s discuss the factors that might continue to take a toll on the firm.
Weak End-Market Condition: Kennametal is experiencing persistent softness in the transportation end market due to supply-chain constraints, mainly related to chip availability. This might be concerning for its performance in the quarters ahead.
High Costs and Expenses: KMT has been dealing with the adverse impacts of increasing the cost of sales and operating expenses. In fiscal fourth-quarter 2022 (ended Jun 2022), its cost of sales increased 5.9% year over year to $360.4 million. Also, Kennametal’s operating income suffered a $22-million negative impact from high raw material costs. Inflation in costs is likely to keep affecting its margins and profitability in the near term.
Forex Woes: Given its widespread presence in the international markets, Kennametal is exposed to unfavorable foreign currency movements. For instance, in fourth-quarter 2022, foreign exchange headwinds had an adverse impact of 4% on KMT’s revenues. A stronger U.S. dollar might depress its overseas business results in the quarters ahead.
Southbound Estimate Revision: In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 (ending June 2023) earnings has been revised 9% downward.
Zacks Rank & Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
GEF’s earnings estimates have increased 0.4% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 19.3% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank #2 (Buy). VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 31.5% in the past six months.
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Reasons Why You Should Avoid Betting on Kennametal (KMT) Now
Kennametal Inc. (KMT - Free Report) failed to impress investors with its recent operational performance due to tough end-market conditions and other challenges, which are likely to adversely impact its earnings.
Image Source: Zacks Investment Research
The currently Zacks Rank #4 (Sell) player has a market capitalization of $2.2 billion. Due to the above-mentioned woes, the stock has lost 19.3% compared with the industry’s decline of 25.4% in the past six months.
Let’s discuss the factors that might continue to take a toll on the firm.
Weak End-Market Condition: Kennametal is experiencing persistent softness in the transportation end market due to supply-chain constraints, mainly related to chip availability. This might be concerning for its performance in the quarters ahead.
High Costs and Expenses: KMT has been dealing with the adverse impacts of increasing the cost of sales and operating expenses. In fiscal fourth-quarter 2022 (ended Jun 2022), its cost of sales increased 5.9% year over year to $360.4 million. Also, Kennametal’s operating income suffered a $22-million negative impact from high raw material costs. Inflation in costs is likely to keep affecting its margins and profitability in the near term.
Forex Woes: Given its widespread presence in the international markets, Kennametal is exposed to unfavorable foreign currency movements. For instance, in fourth-quarter 2022, foreign exchange headwinds had an adverse impact of 4% on KMT’s revenues. A stronger U.S. dollar might depress its overseas business results in the quarters ahead.
Southbound Estimate Revision: In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 (ending June 2023) earnings has been revised 9% downward.
Zacks Rank & Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
GEF’s earnings estimates have increased 0.4% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 19.3% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank #2 (Buy). VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 31.5% in the past six months.