Here's Why Hold Strategy is Apt for Kennametal Stock Right Now

Kennametal Inc. KMT is witnessing several positive trends that hold promise for its long-term growth. This includes an increase in U.S. and international defense spending volumes and digitalization. Also, improved supply chain and increasing original equipment manufacturer build rates in the aerospace market bode well. For fiscal 2025, the company expects revenues from the aerospace & defense markets to increase on a year-over-year basis.

The company remains focused on strategic partnerships and investing in manufacturing facilities to boost growth. For instance, in May 2025, KMT invested in Toolpath Labs, an emerging leader in AI-powered computer-aided manufacturing (CAM) software. The collaboration will enable Kennametal to expand its suite of digital capabilities and offerings for its manufacturing customers worldwide.

Kennametal also remains committed to rewarding its shareholders through dividend payments and share buybacks. In the first nine months of fiscal 2025, it distributed dividends worth $46.6 million to its shareholders and bought back shares for $55.1 million.

Also. in fiscal 2024, Kennametal distributed dividends worth $63.4 million and repurchased shares worth $65.4 million. In February 2024, KMT’s board of directors authorized a repurchase program worth $200 million, which is valid for three years. Since the inception of the program, the company has repurchased 55 million shares.

KMT Stock’s Price Performance

In the past month, this Zacks Rank #3 (Hold) company’s shares have gained 9.3% compared with the industry’s 10.5% growth.

Despite the positives, decrease in demand across the transportation end market, owing to lower volumes and project activity, is affecting the Metal Cutting segment’s organic revenues (which decreased 4% year over year in the third quarter of fiscal 2025). Also, weakness in the general engineering end market due to lower industrial production, along with lower U.S. land rig count in the energy end market, is ailing the segment.

The lackluster performance of the Infrastructure segment owing to weakness in the general engineering end market is another concern. There has been a particular softness in the earth works end market due to lower mining activity in the Americas and Asia Pacific regions. The segment’s organic revenues declined 2% year over year in the fiscal third quarter.

Stocks to Consider

Some better-ranked stocks from the same space 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 delivered a trailing four-quarter average earnings surprise of 6.4%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2025 earnings has increased 1.6%.

Broadwind, Inc. BWEN presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 61.1%.

In the past 60 days, the consensus estimate for BWEN’s 2025 earnings has increased 14.3%.

The Gorman-Rupp Company GRC presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 2.4%.

The Zacks Consensus Estimate for GRC’s 2025 earnings has increased by a penny in the past 60 days.

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

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