) touched a new 52-week high of $52.37 during the trading session
on Dec 31. This is above the previous high of $52.20 reached on
Kennametal's shares closed at $52.07 at the end of trading on Dec
31, with a solid year-to-date return of 23.2%. The volume of
shares traded during that session was 0.38 million. Further
upside potential exists for this Zacks Rank #3 (Hold) machine
tools and accessories maker as reflected in its projected
earnings growth rate of 13.3% for the next five years and
positive revisions in earnings estimate for fiscal 2014 and
CIRCOR INTL (CIR): Free Stock Analysis Report
FLOW INTL CORP (FLOW): Free Stock Analysis
KENNAMETAL INC (KMT): Free Stock Analysis
NN INC (NNBR): Free Stock Analysis Report
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Kennametal's preference for accretive acquisitions and
dispositions of non-core assets to expand its business has reaped
success in the past and is expected to benefit in the quarters
ahead as well.
Further, the acquired tungsten materials business from Allegheny
Technologies in Nov 2013 is worth mentioning. The acquisition
added $340 million to the company's annual revenue and 1,175
employees. This leading producer of tungsten metallurgical
powders and tooling technologies and components will enable
Kennametal to generate $30-$45 million worth annual savings and
will expand the company's presence in key growth sectors,
including aerospace, energy and associated process industries.
Moreover, in the near term, Kennametal anticipates to realize
sales within $200-$220 million range with neutral earnings impact
for the eight months of fiscal 2014. Additionally, cash tax
benefits of $60-$70 million are expected to be realized during
the same period.
Kennametal, over the long term, expects organic growth rate of
6%-10% (CAGR), EBIT % to be greater than or equal to 15%,
earnings per share to grow 15%-20% (CAGR), capital expenditures
to constitute 3%-4% of sales and free cash flow to be greater
than or equal to net income. By fiscal 2017, the company hopes to
double its base business to the $5-$6 billion range.
The above details were provided by Kennametal at its Analysts Day
meet on Nov 6, 2013. Since then, the company's share price rose
12.2% and earnings estimates witnessed upward revisions as well.
These are discussed below.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for
Kennametal advanced 0.3% to $2.97 for fiscal 2014 and 1.4% to
$3.58 for fiscal 2015. Moreover,
for the company is currently at +4.7% and +5.0% for the fiscal
year 2014 and 2015, respectively. This indicates high chances of
robust performances by the company in the quarters ahead.
Kennametal currently has a market capitalization of $4.1 billion.
Some better-ranked stocks in the industry include
CIRCOR International, Inc.
Flow International Corporation
). While CIRCOR and NN carry a Zacks Rank #1 (Strong Buy), Flow
International has a Zacks Rank #2 (Buy).