Earnings Miss: Kennametal Inc. Missed EPS By 8.6% And Analysts Are Revising Their Forecasts

It's been a mediocre week for Kennametal Inc. (NYSE:KMT) shareholders, with the stock dropping 17% to US$20.25 in the week since its latest yearly results. It looks like the results were a bit of a negative overall. While revenues of US$2.0b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 8.6% to hit US$1.20 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, Kennametal's eight analysts currently expect revenues in 2026 to be US$2.00b, approximately in line with the last 12 months. Statutory per share are forecast to be US$1.23, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$2.02b and earnings per share (EPS) of US$1.43 in 2026. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

View our latest analysis for Kennametal

It might be a surprise to learn that the consensus price target was broadly unchanged at US$21.31, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Kennametal, with the most bullish analyst valuing it at US$24.00 and the most bearish at US$19.00 per share. This is a very narrow spread of estimates, implying either that Kennametal is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 Kennametal's revenue growth is expected to slow, with the forecast 1.9% annualised growth rate until the end of 2026 being well below the historical 2.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Kennametal is also expected to grow slower than other industry participants.

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 held steady at US$21.31, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Kennametal going out to 2028, and you can see them free on our platform here..

It might also be worth considering whether Kennametal's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.