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Here's Why You Should Consider Investing in Kennametal Stock

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Key Takeaways

  • Kennametal sees growth in Metal Cutting and Infrastructure, supporting its fiscal 2026 outlook.
  • KMT expands its portfolio with new products and an AI software partnership to boost capabilities.
  • Dividends and buybacks remain central as KMT continues multi-year shareholder return programs.

Kennametal Inc. (KMT - Free Report) is poised to gain from the solid momentum in its end markets, strong product portfolio, product innovations and shareholder-friendly policies. The company remains focused on investing in growth opportunities and strengthening its long-term market position.

This Zacks Rank #1 (Strong Buy) company has a market capitalization of $2.1 billion. In the past six months, the stock has risen 24.2% compared with the industry’s 3.5% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s delve into the factors that make this company investment-worthy at the moment.

Business Strength: Kennametal is witnessing strength in its Metal Cutting segment (revenues increased 3% year over year in the first quarter of fiscal 2026). An increase in original equipment manufacturer build rates in the aerospace market and robust U.S. and international defense spending volumes are driving the segment’s top line. Also, strength in the energy market supported by data center power generation wins and signs of recovery in the general engineering market bode well for the segment.

Recovery in the earthworks market, driven by higher mining activity and new project wins in the Americas region, augurs well for its Infrastructure segment. Owing to the prevailing strength across its businesses, the company expects fiscal 2026 revenues to be in the range of $2.10-$2.17 billion, higher than $1.95-$2.05 billion projected earlier.

Strong Product Portfolio: Kennametal is poised to benefit from its well-diversified portfolio and investments in product development. Some notable products introduced by the company are TopSwiss Inserts, HARVI TE Duo-Lock, KSEM ST Line, Through Coolant ER Collets, FV Geometry Inserts and Chip Fan etc.

Also, it remains focused on strategic partnerships and investing in manufacturing facilities to boost growth. For instance, in May 2025, Kennametal invested in Toolpath Labs, an emerging leader in AI-powered computer-aided manufacturing software. The collaboration will enable KMT to expand its suite of digital capabilities and offerings for its manufacturing customers worldwide.

Shareholder-Friendly Policies: KMT is committed to rewarding shareholders through dividend payouts and share repurchases. In the first three months of fiscal 2026, it distributed dividends worth $15.1 million and repurchased shares worth $10 million. Also, in fiscal 2025, the company distributed dividends totaling $61.9 million to its shareholders and bought back shares for $60 million.
In 2024, the company completed the initial share repurchase program, which was announced in July 2021. Also, in February 2024, its board of directors authorized another repurchase program worth $200 million, which is valid for three years.

Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for KMT’s fiscal 2026 (ending June 2026) earnings has increased 25%. Also, the same for fiscal 2027 (ending June 2027) has been revised upward 16.4%.

Other Key Picks

Other top-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 stocks here.

FLS delivered a trailing four-quarter average earnings surprise of 10.5%. In the past 60 days, the consensus estimate for Flowserve’s 2025 earnings has 3increased 3%.

Powell Industries Inc. (POWL - Free Report) presently carries a Zacks Rank of 2. POWL delivered a trailing four-quarter average earnings surprise of 8.4%. In the past 60 days, the consensus estimate for Powell Industries’ fiscal 2026 earnings has increased 2.5%.

Enersys (ENS - Free Report) currently carries a Zacks Rank of 2. ENS delivered a trailing four-quarter average earnings surprise of 4.8%. In the past 60 days, the Zacks Consensus Estimate for Enersys’ fiscal 2026 earnings has increased 5.3%.

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