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Why Is Kennametal (KMT) Down 21.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Kennametal (KMT - Free Report) . Shares have lost about 21.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Kennametal due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Kennametal Inc. before we dive into how investors and analysts have reacted as of late.
Kennametal Q3 Earnings Beat Estimates on Pricing and Volume
Kennametal reported adjusted earnings of 77 cents per share for the third quarter of fiscal 2026 (ended March 31, 2026), up 63.8% year over year. The bottom line beat the Zacks Consensus Estimate of 68 cents.
Revenue Details
Sales were $592.6 million, up 22.0% from the year-ago quarter. The top line topped the Zacks Consensus Estimate of $567 million. The quarter benefited from stronger volume and pricing.
Organic sales rose 19% year over year. Foreign currency translation had a positive impact of 5% on sales, while divestitures had an adverse impact of 2%.
Regionally (in constant currency), growth was strongest in the Americas (up 27%) and Asia Pacific (up 25%), while EMEA increased 2%. End-market performance also skewed positive, led by Earthworks (up 43%), Energy (up 28%) and Aerospace & Defense (up 23%).
Kennametal’s Segment Highlights
Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal third quarter is briefly discussed below:
The Metal Cutting segment’s revenues of $358 million increased 18% year over year. Organic revenues grew 12% and currency exchange had a positive impact of 6% year over year.
The Infrastructure segment’s revenues totaled $235 million, up 29% year over year. Organic revenues increased 30% and currency exchange had a positive impact of 4% year over year. This was partially offset by the negative impact of 5% from divestitures.
Margin Profile
Kennametal’s cost of goods sold increased 16.5% year over year. Gross profit rose 33.0% year over year to $208.0 million, while the margin increased 300 basis points (bps) to 35.1%. Operating expenses were $124.0 million, up 19.2% year over year.
Operating income increased 79.5% year over year to $79.4 million. Operating margin increased 430 bps year over year to 13.4%. The results were driven by favorable impacts of pricing and tariff surcharges, higher sales and production volume and restructuring savings, offset by increased compensation costs and general inflation.
Interest expenses were $6.3 million, up 0.8% from the year-ago quarter’s figure. The adjusted effective tax rate was 23.1%.
Kennametal’s Cash Flow and Balance Sheet
While exiting the fiscal third quarter, Kennametal’s cash and cash equivalents were $106.9 million compared with $140.5 million at the end of fiscal 2025. Long-term debt was $597.4 million compared with $596.8 million at the end of fiscal 2025.
In the first nine months of fiscal 2026, Kennametal generated net cash of $69.7 million in operating activities compared with $129.7 million in the previous fiscal year’s comparable period. Capital invested in purchasing property, plant and equipment was $53.7 million, down 20.5% from $67.5 million in the prior fiscal year period. Free operating cash flow was $18 million compared with $63 million in the previous fiscal year’s period.
It paid a dividend of $45.6 million and repurchased shares worth $10.1 million.
Outlook and Capital Allocation
It has updated its fiscal 2026 (ending June 2026) outlook. The company currently anticipates sales to be in the range of $2.33-$2.35 billion. Adjusted earnings per share are expected to be in the range of $3.75-$4.00. Free operating cash flow is projected to be approximately (30)% of adjusted net income, while capital spending is expected to be approximately $85 million.
For fiscal 2026, Kennametal expects interest expense of about $25 million and an adjusted effective tax rate of about 25%. The outlook also assumes restructuring savings of about $30 million, with share repurchases paused.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
The consensus estimate has shifted 38.02% due to these changes.
VGM Scores
At this time, Kennametal has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Kennametal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Kennametal (KMT) Down 21.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Kennametal (KMT - Free Report) . Shares have lost about 21.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Kennametal due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Kennametal Inc. before we dive into how investors and analysts have reacted as of late.
Kennametal Q3 Earnings Beat Estimates on Pricing and Volume
Kennametal reported adjusted earnings of 77 cents per share for the third quarter of fiscal 2026 (ended March 31, 2026), up 63.8% year over year. The bottom line beat the Zacks Consensus Estimate of 68 cents.
Revenue Details
Sales were $592.6 million, up 22.0% from the year-ago quarter. The top line topped the Zacks Consensus Estimate of $567 million. The quarter benefited from stronger volume and pricing.
Organic sales rose 19% year over year. Foreign currency translation had a positive impact of 5% on sales, while divestitures had an adverse impact of 2%.
Regionally (in constant currency), growth was strongest in the Americas (up 27%) and Asia Pacific (up 25%), while EMEA increased 2%. End-market performance also skewed positive, led by Earthworks (up 43%), Energy (up 28%) and Aerospace & Defense (up 23%).
Kennametal’s Segment Highlights
Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal third quarter is briefly discussed below:
The Metal Cutting segment’s revenues of $358 million increased 18% year over year. Organic revenues grew 12% and currency exchange had a positive impact of 6% year over year.
The Infrastructure segment’s revenues totaled $235 million, up 29% year over year. Organic revenues increased 30% and currency exchange had a positive impact of 4% year over year. This was partially offset by the negative impact of 5% from divestitures.
Margin Profile
Kennametal’s cost of goods sold increased 16.5% year over year. Gross profit rose 33.0% year over year to $208.0 million, while the margin increased 300 basis points (bps) to 35.1%. Operating expenses were $124.0 million, up 19.2% year over year.
Operating income increased 79.5% year over year to $79.4 million. Operating margin increased 430 bps year over year to 13.4%. The results were driven by favorable impacts of pricing and tariff surcharges, higher sales and production volume and restructuring savings, offset by increased compensation costs and general inflation.
Interest expenses were $6.3 million, up 0.8% from the year-ago quarter’s figure. The adjusted effective tax rate was 23.1%.
Kennametal’s Cash Flow and Balance Sheet
While exiting the fiscal third quarter, Kennametal’s cash and cash equivalents were $106.9 million compared with $140.5 million at the end of fiscal 2025. Long-term debt was $597.4 million compared with $596.8 million at the end of fiscal 2025.
In the first nine months of fiscal 2026, Kennametal generated net cash of $69.7 million in operating activities compared with $129.7 million in the previous fiscal year’s comparable period. Capital invested in purchasing property, plant and equipment was $53.7 million, down 20.5% from $67.5 million in the prior fiscal year period. Free operating cash flow was $18 million compared with $63 million in the previous fiscal year’s period.
It paid a dividend of $45.6 million and repurchased shares worth $10.1 million.
Outlook and Capital Allocation
It has updated its fiscal 2026 (ending June 2026) outlook. The company currently anticipates sales to be in the range of $2.33-$2.35 billion. Adjusted earnings per share are expected to be in the range of $3.75-$4.00. Free operating cash flow is projected to be approximately (30)% of adjusted net income, while capital spending is expected to be approximately $85 million.
For fiscal 2026, Kennametal expects interest expense of about $25 million and an adjusted effective tax rate of about 25%. The outlook also assumes restructuring savings of about $30 million, with share repurchases paused.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
The consensus estimate has shifted 38.02% due to these changes.
VGM Scores
At this time, Kennametal has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Kennametal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.