Kennametal Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in Kennametal Inc. (NYSE:KMT) had a good week, as its shares rose 3.4% to close at US$20.80 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$486m were what the analysts expected, Kennametal surprised by delivering a (statutory) profit of US$0.41 per share, an impressive 67% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, Kennametal's eight analysts currently expect revenues in 2026 to be US$2.01b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 6.5% to US$1.33 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.00b and earnings per share (EPS) of US$1.31 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

View our latest analysis for Kennametal

There were no changes to revenue or earnings estimates or the price target of US$21.69, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Kennametal at US$24.00 per share, while the most bearish prices it at US$19.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kennametal's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Kennametal's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 0.5% growth on an annualised basis. This is compared to a historical growth rate of 2.4% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kennametal.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Kennametal going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Kennametal , and understanding it should be part of your investment process.

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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.