NYSE:KAI

Stock Analysis Report

Executive Summary

Kadant Inc. supplies equipment and critical components used in papermaking, paper recycling, recycling and waste management, and other process industries worldwide.

Rewards

Trading at 20.1% below its fair value

Earnings are forecast to grow 15.19% per year

Earnings grew by 44.6% over the past year

Risk Analysis

Has a high level of debt

Highly volatile share price over past 3 months



Snowflake Analysis

Solid track record with mediocre balance sheet.


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Share Price & News

How has Kadant's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KAI's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

5.2%

KAI

1.9%

US Machinery

2.0%

US Market


1 Year Return

30.9%

KAI

18.6%

US Machinery

23.5%

US Market

Return vs Industry: KAI exceeded the US Machinery industry which returned 22.4% over the past year.

Return vs Market: KAI exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

KAIIndustryMarket
7 Day5.2%1.9%2.0%
30 Day6.7%1.5%4.3%
90 Day29.3%10.8%12.2%
1 Year32.2%30.9%20.8%18.6%26.1%23.5%
3 Year90.8%85.2%46.1%36.7%53.1%43.2%
5 Year193.9%176.8%78.2%56.6%75.5%56.1%

Price Volatility Vs. Market

How volatile is Kadant's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Kadant undervalued compared to its fair value and its price relative to the market?

17.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: KAI ($109.55) is trading below our estimate of fair value ($137.07)

Significantly Below Fair Value: KAI is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: KAI is good value based on its PE Ratio (19.8x) compared to the Machinery industry average (23.4x).

PE vs Market: KAI is poor value based on its PE Ratio (19.8x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: KAI is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: KAI is overvalued based on its PB Ratio (3x) compared to the US Machinery industry average (2.5x).


Next Steps

Future Growth

How is Kadant forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

15.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: KAI's forecast earnings growth (15.2% per year) is above the savings rate (1.7%).

Earnings vs Market: KAI's earnings (15.2% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: KAI's earnings are forecast to grow, but not significantly.

Revenue vs Market: KAI's revenue (3.8% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: KAI's revenue (3.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KAI's Return on Equity is forecast to be low in 3 years time (14.6%).


Next Steps

Past Performance

How has Kadant performed over the past 5 years?

16.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KAI has high quality earnings.

Growing Profit Margin: KAI's current net profit margins (9%) are higher than last year (6.9%).


Past Earnings Growth Analysis

Earnings Trend: KAI's earnings have grown by 16% per year over the past 5 years.

Accelerating Growth: KAI's earnings growth over the past year (44.6%) exceeds its 5-year average (16% per year).

Earnings vs Industry: KAI earnings growth over the past year (44.6%) exceeded the Machinery industry 9.6%.


Return on Equity

High ROE: KAI's Return on Equity (15.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Kadant's financial position?


Financial Position Analysis

Short Term Liabilities: KAI's short term assets ($291.3M) exceed its short term liabilities ($143.7M).

Long Term Liabilities: KAI's short term assets ($291.3M) do not cover its long term liabilities ($385.0M).


Debt to Equity History and Analysis

Debt Level: KAI's debt to equity ratio (77.5%) is considered high.

Reducing Debt: KAI's debt to equity ratio has increased from 8.8% to 77.5% over the past 5 years.

Debt Coverage: KAI's debt is well covered by operating cash flow (21.8%).

Interest Coverage: KAI's interest payments on its debt are well covered by EBIT (7.3x coverage).


Balance Sheet

Inventory Level: KAI has a high level of physical assets or inventory.

Debt Coverage by Assets: KAI's debt is not covered by short term assets (assets are 0.9x debt).


Next Steps

Dividend

What is Kadant's current dividend yield, its reliability and sustainability?

0.82%

Current Dividend Yield


Dividend Yield vs Market

company0.8%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: KAI's dividend (0.84%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: KAI's dividend (0.84%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, KAI has been paying a dividend for less than 10 years.

Growing Dividend: KAI's dividend payments have increased, but the company has only paid a dividend for 7 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (16.5%), KAI's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Kadant's salary, the management and board of directors tenure and is there insider trading?

3.7yrs

Average management tenure


CEO

Jeffrey Powell (60yo)

0.5yrs

Tenure

US$1,805,524

Compensation

Mr. Jeffrey L. Powell serves as President at Kadant Inc. since April 1, 2019 and also its Chief Executive Officer & Director since July 1, 2019. Mr. Powell had been an Executive Vice President of Kadant In ...


CEO Compensation Analysis

Compensation vs Market: Jeffrey's total compensation ($USD1.81M) is below average for companies of similar size in the US market ($USD3.86M).

Compensation vs Earnings: Jeffrey's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.7yrs

Average Tenure

56yo

Average Age

Experienced Management: KAI's management team is considered experienced (3.7 years average tenure).


Board Age and Tenure

5.0yrs

Average Tenure

62yo

Average Age

Experienced Board: KAI's board of directors are considered experienced (5 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Dara Mitchell

    Senior Vice President of Corporate Development

    • Tenure: 3.8yrs
  • Jeffrey Powell (60yo)

    President

    • Tenure: 0.5yrs
    • Compensation: US$1.81m
  • Mike McKenney (57yo)

    Executive VP & CFO

    • Tenure: 4.6yrs
    • Compensation: US$1.45m
  • Eric Langevin (56yo)

    Executive VP & COO

    • Tenure: 0.8yrs
    • Compensation: US$1.70m
  • Deb Selwood (50yo)

    Senior VP & Chief Accounting Officer

    • Tenure: 4.6yrs
  • Bilal Mehmood

    VP & CTO

    • Tenure: 3.7yrs
  • Wesley Martz

    Vice President of Marketing

    • Tenure: 12.8yrs
  • Stacy Krause (42yo)

    VP, General Counsel & Secretary

    • Tenure: 1.5yrs
    • Compensation: US$662.86k
  • Orrin Bean

    Treasurer

    • Tenure: 1yrs

Board Members

  • Jack Albertine (74yo)

    Independent Director

    • Tenure: 18.6yrs
    • Compensation: US$312.27k
  • Jeffrey Powell (60yo)

    President

    • Tenure: 0.5yrs
    • Compensation: US$1.81m
  • Jon Painter (60yo)

    Executive Chairman

    • Tenure: 0.5yrs
    • Compensation: US$4.64m
  • Erin Russell (44yo)

    Independent Director

    • Tenure: 1yrs
  • Tom Leonard (64yo)

    Independent Director

    • Tenure: 14.6yrs
    • Compensation: US$314.77k
  • William Tully (78yo)

    Independent Director

    • Tenure: 9.1yrs
    • Compensation: US$314.77k

Company Information

Kadant Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Kadant Inc.
  • Ticker: KAI
  • Exchange: NYSE
  • Founded: 1991
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Market Cap: US$1.239b
  • Shares outstanding: 11.27m
  • Website: https://www.kadant.com

Number of Employees


Location

  • Kadant Inc.
  • One Technology Park Drive
  • Westford
  • Massachusetts
  • 1886
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
KAINYSE (New York Stock Exchange)YesCommon StockUSUSDNov 1992
KDADB (Deutsche Boerse AG)YesCommon StockDEEURNov 1992

Biography

Kadant Inc. supplies equipment and critical components used in papermaking, paper recycling, recycling and waste management, and other process industries worldwide. The company operates in two segments, Papermaking Systems and Wood Processing Systems. The Papermaking Systems segment develops, manufactures, and markets custom-engineered stock-preparation systems and equipment for the preparation of wastepaper for conversion into recycled paper and balers, as well as related equipment used in the processing of recyclable and waste materials; and fluid-handling systems and equipment used in industrial piping systems to compensate for movement, as well as to transfer fluid, power, and data. This segment also offers doctoring systems and equipment, and related consumables to enhance the operation of paper machines and other industrial processes; and filtration and cleaning systems for draining, purifying, and recycling process water, as well as cleaning fabrics, belts, and rolls in various process industries. The Wood Processing Systems segment develops, manufactures, markets, and supplies debarkers, stranders, chippers, logging machinery, and related equipment used in the harvesting and production of lumber and oriented strand board, an engineered wood panel product used primarily in home construction. This segment also provides pulping equipment refurbishment and repair services for the pulp and paper industry. The company also manufactures and sells granules for use in turf and ornamental applications, and oil and grease absorption, as well as carriers for agricultural, home lawn and garden, and professional lawn applications; and provides material handling equipment and systems to various process industries. The company was formerly known as Thermo Fibertek Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was founded in 1991 and is headquartered in Westford, Massachusetts. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/17 23:46
End of Day Share Price2020/01/17 00:00
Earnings2019/09/28
Annual Earnings2018/12/29


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.