February 8, 2024
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 S&P Mid-Cap Index
Kennametal is listed as a top 10 stock on February 08, 2024 in the market index S&P MIDCAP because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 67 (high 67% performer), Obermatt assesses an overall buy recommendation for Kennametal on February 08, 2024.
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° View Kennametal Buy
| 360 METRICS | February 8, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 94 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 71 |
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| SENTIMENT | ||||||||
| SENTIMENT | 26 |
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| 360° VIEW | ||||||||
| 360° VIEW | 67 |
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ANALYSIS: With an Obermatt 360° View of 67 (better than 67% compared with alternatives), overall professional sentiment and financial characteristics for the stock Kennametal are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Kennametal. The consolidated Value Rank has an attractive rank of 94, which means that the share price of Kennametal is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 94% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 71. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 26. Professional investors are more confident in 74% other stocks. The consolidated Growth Rank also has a low rank of 31, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 69 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 67, Kennametal is better positioned than 67% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 94), and the financing structure is on the safer side (Safety Rank of 71). However, sentiment in the professional investor community is below-average (Sentiment Rank of 26), as is the growth momentum for the company (Growth Rank of 31). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Kennametal only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 26 (better than 26% compared with alternatives), overall professional sentiment and engagement for the stock Kennametal is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for Kennametal. Analyst Opinions are at a rank of 1 (worse than 99% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 41, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 44, which means that professional investors hold less stock in this company than in 56% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Kennametal is Market Pulse, with a rank of 55, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 55% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 26 (less encouraging than 74% compared with investment alternatives), Kennametal has a reputation among professional investors that is below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Kennametal Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 94 (better than 94% compared with alternatives) for 2024, 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 is 69 which means that the stock price compared with what market professionals expect for future sales is lower than for 69% 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 67. Compared with other companies in the same industry, dividend yields of Kennametal are expected to be higher than for 98% of all competitors (a Dividend Yield rank of 98). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 94, is a 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 low
ANALYSIS: With an Obermatt Growth Rank of 31 (better than 31% compared with alternatives), Kennametal shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Kennametal. While Profit Growth has a good rank of 77, as professionals currently expect the company to grow its profits more than 77% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 25, which means that currently professionals expect the company to grow less than 75% of its competitors, while Capital Growth has a rank of 27 and Stock Returns have been below market median, with a rank of 29 (71% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 31, is a hold recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: Kennametal Debt Financing Safety above-average
| SAFETY METRICS | February 8, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 53 |
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| REFINANCING | ||||||||
| REFINANCING | 80 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 48 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 71 |
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ANALYSIS: With an Obermatt Safety Rank of 71 (better than 71% 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 two out of three are above average for Kennametal.Leverage is at 53, meaning the company has a below-average debt-to-equity ratio. It has less debt than 53% of its competitors.Refinancing is at a rank of 80, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 80% of its competitors. Liquidity is at 48, meaning that the company generates less profit to service its debt than 52% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 71 (better than 71% compared with alternatives), Kennametal has a financing structure that is safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. ...read more
Combined financial peformance: Kennametal Top Financial Performance
| COMBINED PERFORMANCE | February 8, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 94 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 48 |
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| COMBINED | ||||||||
| COMBINED | 78 |
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ANALYSIS: With an Obermatt Combined Rank of 78 (better than 78% compared with investment alternatives), Kennametal (Industrial Machinery, USA) shares have much better financial characteristics than comparable stocks. Shares of Kennametal are a good value (attractively priced) with a consolidated Value Rank of 94 (better than 94% of alternatives), are safely financed (Safety Rank of 71, which means low debt burdens), but show below-average growth (Growth Rank of 31). ...read more
RECOMMENDATION: A Combined Rank of 78, is a strong buy recommendation based on Kennametal's financial characteristics. As the company Kennametal's key financial metrics exhibit good value (Obermatt Value Rank of 94) but low growth (Obermatt Growth Rank of 31) while being safely financed (Obermatt Safety Rank of 71), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 94% 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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