Reasons Why You Should Avoid Betting on Kennametal Stock Right Now

Kennametal Inc. KMT has failed to impress investors with its recent operational performance due to weakness across its businesses and high debt level.

Based in Pittsburgh, PA, Kennametal is engaged in designing, manufacturing and marketing high-speed metal cutting tools, tooling systems and wear-resistant parts. The company’s products are marketed through a number of channels to the end users, comprising manufacturers of machine tools, transportation vehicles, airframe, aerospace components, machinery and others.

Let’s discuss the factors that continue to take a toll on the firm.

Factors Affecting KMT

Business Weakness: Kennametal has been witnessing weakness in the Metal Cutting segment. The decrease in demand across the transportation end market, owing to continued OEM production softness, is affecting the Metal Cutting segment’s organic revenues (which decreased 4% year over year in the fourth quarter of fiscal 2025). Also, weakness in the general engineering end market due to lower industrial production, along with lower mining activity in the Asia Pacific and the Americas regions, is ailing the segment. Lower energy activity in Europe Middle East & Africa and decreased rig counts in the Americas also remain concerning.

The lackluster performance of the Infrastructure segment due to weakness in the general engineering end market, arising from declines in industrial activity, is a point of concern. There was a particular softness in the earthworks end market due to lower mining activity in the Americas and Asia Pacific regions. The segment’s organic revenues declined 5% year over year in the fourth quarter of fiscal 2025.

High Debt Level: Exiting fourth-quarter fiscal 2025, Kennametal’s long-term debt remained high at $596.8 million. Considering its high debt level, its cash and cash equivalents of $140.5 million do not look impressive. It’s worth noting that the company’s long-term debt-to-capital ratio is currently pegged at 31.1%. High debt levels can increase financial obligations and prove detrimental to profitability in the quarters ahead.

KMT Stock’s Price Performance

Over the past year, the Zacks Rank #5 (Strong Sell) company has lost 16.3% against the industry’s 4.4% growth.

Forex Woes: With KMT’s operations spread globally, its business is exposed to risks arising from geopolitical issues, adverse movement in foreign currencies and governmental policies. In fiscal 2025 (ended June 2025), foreign currency translation had a negative impact of 1% on its revenues.

Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for Kennametal’s fiscal 2026 (ending June 2026) earnings has trended down from $1.38 per share to $1.22 on two downward estimate revisions against none upward. The consensus estimate for first-quarter fiscal 2026 (ending September 2025) earnings decreased from 29 cents per share to 26 cents on one downward estimate revision against none upward.

Key Picks

Some better-ranked stocks are discussed below.

Federal Signal Corporation FSS currently carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FSS has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average surprise being 5.7%.  In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2025 earnings has increased 4.2%.

ITT Inc. ITT currently carries a Zacks Rank of 2. ITT has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average surprise being 1.5%.  In the past 60 days, the Zacks Consensus Estimate for ITT’s 2025 earnings has increased 1.7%.

RBC Bearings Incorporated RBC currently carries a Zacks Rank of 2. RBC outperformed the consensus estimate thrice in the preceding four quarters and missed once, with an average surprise of 3.8%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ 2025 earnings has increased 1.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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