One of the biggest stories of last week was how Kennametal Inc. (NYSE:KMT) shares plunged 21% in the week since its latest first-quarter results, closing yesterday at US$23.00. Revenues were US$768m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$3.48, an impressive 32% ahead of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kennametal after the latest results.
Taking into account the latest results, the most recent consensus for Kennametal from eight analysts is for revenues of US$3.36b in 2027. If met, it would imply a sizeable 28% increase on its revenue over the past 12 months. Statutory earnings per share are expected to crater 35% to US$5.00 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.38b and earnings per share (EPS) of US$4.94 in 2027. 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
The analysts reconfirmed their price target of US$30.57, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Kennametal analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$27.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Kennametal's growth to accelerate, with the forecast 39% annualised growth to the end of 2027 ranking favourably alongside historical growth of 2.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Kennametal is expected to grow much faster than its industry.
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, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Kennametal going out to 2029, 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 5 warning signs with Kennametal (at least 3 which are potentially serious) , and understanding them should be part of your investment process.
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