Earnings Miss: Kennametal Inc. Missed EPS By 11% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Kennametal Inc. (NYSE:KMT) released its second-quarter result to the market. The early response was not positive, with shares down 9.3% to US$21.97 in the past week. It was not a great result overall. While revenues of US$482m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit US$0.23 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Kennametal

Taking into account the latest results, Kennametal's eight analysts currently expect revenues in 2025 to be US$2.01b, approximately in line with the last 12 months. Statutory per share are forecast to be US$1.25, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.03b and earnings per share (EPS) of US$1.43 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target fell 5.7% to US$25.00, with the analysts clearly linking lower forecast earnings to the performance of the stock price. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Kennametal at US$30.00 per share, while the most bearish prices it at US$21.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 1.8% annualised decline to the end of 2025. That is a notable change from historical growth of 1.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.2% per year. It's pretty clear that Kennametal's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Kennametal's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Kennametal's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Kennametal. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Kennametal analysts - going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Kennametal that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.