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Kennametal (KMT) Announces $100M Cost-Reduction Program

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At its Investor Day, held on Sep 8, Kennametal Inc. (KMT - Free Report) provided an update on its growth strategy and announced financial targets through fiscal 2027.

The company expects organic sales to increase at a CAGR of 4-6% through fiscal 2027. It expects adjusted EBITDA margin of 20-23% through fiscal 2027. KMT anticipates adjusted earnings per share to increase at a CAGR of 20-25%. It estimates adjusted return on invested capital of 12-14%. Free operating cash flow is predicted to be more than 100% of adjusted net income through fiscal 2027.

Kennametal also announced a $100 million operational excellence and capacity optimization cost savings initiative, as part of which the company plans to shut down three to five plants and reduce inventory levels. The latest cost-reduction initiative includes the previously announced $20 million restructuring program.

Kennametal’s president and CEO Christopher Rossi said that the company has lately invested in upgrading its manufacturing facilities to drive productivity, enhance customer service and add products to the market. The company is experiencing growth in its aerospace and defense markets as a result of its enhanced commercial excellence process. Based on these initiatives, along with its latest cost-reduction actions, KMT is confident of being able to achieve its financial targets through fiscal 2027.

Zacks Rank & Key Picks

Kennametal presently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks within the broader Industrial Products sector are as follows:

Flowserve Corporation (FLS - Free Report) presently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 6.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

Flowserve has an estimated earnings growth rate of 79.1% for the current year. The stock has jumped 31.2% so far this year.

Graham Corporation (GHM - Free Report) currently flaunts a Zacks Rank #1. The company pulled off a trailing four-quarter earnings surprise of 243.1%, on average.

Graham has an estimated earnings growth rate of 400% for the current fiscal year. The stock has rallied 68.7% so far this year.

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