May 25, 2023
Top 10 Stock Kennametal Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Kennametal – Top 10 Stock in Employee Satisfaction Leaders in the United States
Kennametal is listed as a top 10 stock on May 25, 2023 in the market index Employee Focus US because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 69 (high 69% performer), Obermatt assesses an overall buy recommendation for Kennametal on May 25, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Industrial Machinery |
| Index | Dividends USA, Employee Focus US, S&P MIDCAP |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment Kennametal Buy
| 360 METRICS | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 95 |
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| GROWTH | ||||||||
| GROWTH | 9 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| SENTIMENT | ||||||||
| SENTIMENT | 55 |
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| 360° VIEW | ||||||||
| 360° VIEW | 69 |
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ANALYSIS: With an Obermatt 360° View of 69 (better than 69% compared with alternatives), overall professional sentiment and engagement for the stock Kennametal are above average. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Kennametal. The consolidated Value Rank has an attractive rank of 95, which means that the share price of Kennametal is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 95% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 65. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 55. But the consolidated Growth Rank has a low rank of 9, which means that the company is below average in terms of growth, and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 91 of its competitors have better growth. ...read more
RECOMMENDATION: With a 360° View of 69, Kennametal is better than 69% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 95), secure financing practices (Safety Rank of 65), and positive market sentiment in the professional investor community (Sentiment Rank of 55). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company growth expectations are below the industry average (Growth Rank of 9), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good value ranking can sometimes indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Kennametal is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Kennametal positive
ANALYSIS: With an Obermatt Sentiment Rank of 55 (better than 55% compared with alternatives), overall professional sentiment and engagement for the stock Kennametal is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Kennametal. Analyst Opinions are at a rank of 4 (worse than 96% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 96, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Kennametal. Even better, the Professional Investors rank is 80, meaning that professional investors hold more stock in this company than in 80% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 62, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 62% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 55 (more positive than 55% compared with investment alternatives), Kennametal has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Kennametal Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 95 (better than 95% compared with alternatives) for 2023, Kennametal shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Kennametal. Price-to-Sales has a value of 65 which means that the stock price compared with what market professionals expect for future sales is lower than for 65% of comparable companies, indicating a good value for Kennametal's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 70% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 69. Compared with other companies in the same industry, dividend yields of Kennametal are expected to be higher than for 99% of all competitors (a Dividend Yield rank of 99). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 95, is a strong buy recommendation based on Kennametal's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Kennametal based on its detailed value metrics.
Growth Strategy: Kennametal Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 9 (better than 9% compared with alternatives), Kennametal shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Kennametal. Sales Growth has a rank of 18, which means that currently professionals expect the company to grow less than 82% of its competitors. The same is valid for Profit Growth, with a rank of 19, and Capital Growth with 39. In addition, Stock Returns have a below market rank of 43, which means that the stock returns have recently been below 57% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 9, is a SELL recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's prospects, especially Sentiment performance, because it may be a turnaround situation that could entail above-average returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Kennametal Debt Financing Safety above-average
| SAFETY METRICS | May 25, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 52 |
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| REFINANCING | ||||||||
| REFINANCING | 68 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 53 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 65 |
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ANALYSIS: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), the company Kennametal has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Kennametal is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Kennametal. Leverage is at 52, meaning the company has a below-average debt-to-equity ratio. It has less debt than 52% of its competitors. Refinancing is at a rank of 68, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 68% of its competitors. Finally, Liquidity is also good at a rank of 53, which means that the company generates more profit to service its debt than 53% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 65 (better than 65% compared with alternatives), Kennametal has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Kennametal Above-Average Financial Performance
| COMBINED PERFORMANCE | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 95 |
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| GROWTH | ||||||||
| GROWTH | 9 |
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| SAFETY | ||||||||
| SAFETY | 53 |
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| COMBINED | ||||||||
| COMBINED | 61 |
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ANALYSIS: With an Obermatt Combined Rank of 61 (better than 61% compared with investment alternatives), Kennametal (Industrial Machinery, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Kennametal are a good value (attractively priced) with a consolidated Obermatt Value Rank of 95 (better than 95% of alternatives), are safely financed (Safety Rank of 65, which means low debt burdens), but show below-average growth (Growth Rank of 9). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 61, is a buy recommendation based on Kennametal's financial characteristics. As the company Kennametal's key financial metrics exhibit good value (Obermatt Value Rank of 95) but low growth (Obermatt Growth Rank of 9) while being safely financed (Obermatt Safety Rank of 65), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 95% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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