Press Release: Kennametal To Attend Barclays 43Rd Annual Industrial Select Conference

Kennametal has had an impressive run over the past six months as its shares have beaten the S&P 500 by 24.9%. The stock now trades at $33.28, marking a 36.2% gain. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.

Why Do We Think Kennametal Will Underperform?

We’re glad investors have benefited from the price increase, but we're swiping left on Kennametal for now. Here are three reasons you should be careful with KMT and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Kennametal grew its sales at a sluggish 2.3% compounded annual growth rate. This fell short of our benchmarks.

2. Core Business Falling Behind as Demand Declines

We can better understand Professional Tools and Equipment companies by analyzing their organic revenue. This metric gives visibility into Kennametal’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Kennametal’s organic revenue averaged 2.3% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Kennametal might have to lean into acquisitions to grow, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus).

3. EPS Took a Dip Over the Last Two Years

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Kennametal, its EPS declined by more than its revenue over the last two years, dropping 4.7%. This tells us the company struggled to adjust to shrinking demand.

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of Kennametal, we’ll be cheering from the sidelines. With its shares beating the market recently, the stock trades at 18.8× forward P/E (or $33.28 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are superior stocks to buy right now. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.

What Happened?

Shares of industrial materials and tools company Kennametal jumped 8.6% in the afternoon session after Jefferies upgraded the stock to Buy from Hold and raised its price target to $40 from $28, citing an unprecedented spike in tungsten prices. 

The upgrade followed a massive surge in tungsten prices, which had risen 190% year-over-year and 47% since November. Analysts at the firm explained that this price jump was expected to significantly boost Kennametal's near-term earnings and margins. The positive outlook provided investors with potential returns while they waited for early signs of recovery in short-cycle markets. This news added to the company's recent strong performance, as Kennametal had previously reported first-quarter fiscal 2026 results that exceeded Wall Street's expectations for both earnings and revenue.

What Is The Market Telling Us

Kennametal’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 2.9% on the news that markets rotated out of tech names to position themselves for a massive injection of government spending. The sector was ignited by President Trump's call for a $1.5 trillion defense budget for 2027, a significant increase that sent defense contractors surging. Northrop Grumman jumped over 10% and Lockheed Martin gained nearly 8%, acting as the primary engine for the sector's outperformance.Beyond the immediate defense rally, the industrial sector benefited from a broader stabilization in energy costs, with crude prices rebounding. This combination of policy-driven demand and stabilizing input costs made heavy industry an attractive destination.

Kennametal is up 14.6% since the beginning of the year, and at $33.23 per share, has set a new 52-week high. Investors who bought $1,000 worth of Kennametal’s shares 5 years ago would now be looking at an investment worth $860.63.