Kennametal Inc. (KMT Quick QuoteKMT - Free Report) is benefiting from solid demand across both its segments. Its investment in product development and shareholder-friendly policies also bodes well.

KMT currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the firm for a while now.

Solid Momentum in Metal Cutting Segment: Kennametal’s Metal Cutting business continues to benefit from share gains, higher aerospace build rates and project wins in energy. In fourth-quarter fiscal 2026, its organic sales rose 22% year over year. On a constant-currency basis, the segment’s sales increased 36% in energy, 35% in aerospace & defense and 25% in general engineering end markets. The Metal Cutting segment’s growth was supported by data center power generation wins, higher aerospace build rates and indirect-channel share gains.

Recovery in Infrastructure Segment and Pricing Momentum: Kennametal’s Infrastructure segment is benefiting from pricing, share gains and project execution across several end markets. The segment’s organic sales rose 74% year over year in the fiscal fourth quarter. On a constant-currency basis, energy end market’s sales increased 135%, earthworks rose 76%, aerospace & defense advanced 63% and general engineering increased 37%. Earthworks end market’s growth reflected higher volume in surface mining and construction, including share gains tied to material availability. Energy end market’s growth was driven mainly by pricing in the Americas, while aerospace & defense end market benefited from pricing and strategic initiatives in the Americas and EMEA.

In the past year, the company’s shares have gained 54.4% compared with the industry‘s 9.8% growth.

Image Source: Zacks Investment Research

Innovation and Portfolio Investment: Kennametal continues to invest in product development, digital capabilities and higher-growth applications. In aerospace, the company is targeting a roughly $500 million market for cutting tools used on carbon fiber reinforced plastics, which it estimates will grow 9% annually through 2028. Kennametal is pursuing the opportunity through proprietary geometry and material science, a broader product portfolio, application engineering, channel relationships and a three-year innovation pipeline. KMT also highlighted a recent customer win after it supplied a superior composite-cutting product and guaranteed supply during a competitor disruption.

Shareholder Returns With Discipline: Kennametal continues to return cash through dividends while adjusting repurchases to protect liquidity. In fiscal 2026, the company paid $60.8 million in dividends and repurchased $10.1 million of shares, returning about $71 million to shareholders. Since the $200 million repurchase program was authorized in February 2024, the company has bought back about $70 million of stock. However, the company has paused further repurchases until cash flow turns positive as tungsten-related working capital remains elevated.

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