Kennametal Outruns Estimates Again

Seth Jayson, The Motley Fool
Updated

Kennametal (NYS: KMT) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended Dec. 31 (Q2), Kennametal met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew, and GAAP earnings per share increased significantly.

Margins expanded across the board.

Revenue details
 Kennametal reported revenue of $641.7 million. The 12 analysts polled by S&P Capital IQ expected revenue of $638.7 million. Sales were 13% higher than the prior-year quarter's $565.8 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
 Non-GAAP EPS came in at $0.91. The 13 earnings estimates compiled by S&P Capital IQ anticipated $0.78 per share on the same basis. GAAP EPS of $0.88 for Q2 were 75% higher than the prior-year quarter's $0.52 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
 For the quarter, gross margin was 36.1%, 60 basis points better than the prior-year quarter. Operating margin was 14.7%, 290 basis points better than the prior-year quarter. Net margin was 11.5%, 380 basis points better than the prior-year quarter.

Looking ahead
 Next quarter's average estimate for revenue is $662.3 million. On the bottom line, the average EPS estimate is $0.93.

Next year's average estimate for revenue is $2.70 billion. The average EPS estimate is $3.79.

Investor sentiment
 The stock has a four-star rating (out of five) at Motley Fool CAPS, with 282 members out of 297 rating the stock outperform, and 15 members rating it underperform. Among 120 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 116 give Kennametal a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Kennametal is outperform, with an average price target of $46.83.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of Kennametal. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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