GET DAILY SIGNALSKennametal (KMT) Delivers Record Fiscal Q1 EPS on Raw Material Tailwinds
Key Takeaways
- Kennametal (KMT) reported fiscal 2027 first quarter sales of $768.2 million, up 54% from $498.0 million a year earlier.
- Diluted earnings per share (EPS) reached a record $3.48 for a fiscal first quarter, well above the $2.66 analyst consensus, while revenue came in slightly below the roughly $770.8 million estimate.
- Net income attributable to Kennametal jumped to $271.6 million, driven primarily by the favorable timing of raw material-related pricing versus costs tied to elevated tungsten prices.
- Operating income surged to $379.3 million, with Metal Cutting sales up 28% and Infrastructure sales nearly doubling.
- The company declared a quarterly cash dividend of $0.20 per share, payable November 23, 2026, and updated its fiscal 2027 earnings outlook.
Earnings in Context
Kennametal's fiscal 2027 first quarter results highlight a notable shift in profitability for the industrial technology company, largely tied to the sharp rise in tungsten prices. As a supplier of tooling and wear-resistant solutions, the company's performance provides insight into industrial demand in aerospace, defense, energy, and transportation. The outsized earnings show how raw material pricing can move quickly through pricing mechanisms, yet they also point to the working capital demands that come with higher inventory values. In my view, the report helps clarify how pricing discipline and raw material pass-through can support margins during commodity spikes, while also raising questions about how durable these gains might be and the state of underlying volumes.
Quarterly Results
Kennametal reported fiscal 2027 first quarter sales of $768.2 million, a 54% increase from $498.0 million in the prior year period. Diluted EPS reached $3.48, a record for a fiscal first quarter and well above the $2.66 consensus estimate, though revenue came in modestly below the roughly $770.8 million analysts had expected. Net income attributable to Kennametal was $271.6 million, up from $23.3 million a year ago.
The large swing in profitability stemmed from approximately $323 million of favorable timing related to raw material-related pricing versus costs, mainly in the Infrastructure segment. Metal Cutting sales rose 28% to $398.2 million, while Infrastructure sales nearly doubled to $370.0 million. Operating income reached $379.3 million, or a 49.4% margin. Kennametal also declared a $0.20 per share quarterly dividend and updated its fiscal 2027 outlook, raising full-year adjusted EPS guidance. From what I see, these numbers underscore the leverage in the business when commodity prices move sharply.
Market Reaction
Investor sentiment ahead of the report was measured, with focus on how elevated tungsten prices would influence both earnings and cash flow. The record EPS and 54% sales growth illustrate strong operating leverage when raw material prices rise quickly, but the market is also considering the sustainability of these results. A key area of attention remains cash conversion: year-to-date net cash from operating activities was negative $201.3 million, and free operating cash flow was negative $212 million, reflecting a larger inventory base and prepayments to secure raw material supply. Management noted Infrastructure volume pressures and pricing sensitivity in certain applications, which may limit some enthusiasm despite the headline profit strength.
Looking Ahead
Going forward, investors will watch closely to see whether the favorable tungsten price-versus-cost timing continues or reverses. Management's updated fiscal 2027 EPS outlook incorporates both the first quarter outperformance and a recent decline in tungsten prices, indicating that the timing benefit may not recur at the same scale.
Cash generation stays a central topic. Higher tungsten costs have increased inventory values and working capital needs, and Kennametal is emphasizing inventory efficiency and better cash conversion. Progress on its lean transformation program, which has delivered over $70 million in cumulative gross savings since fiscal 2025, will be worth monitoring.
Volume trends are also relevant. Metal Cutting posted its fourth consecutive quarter of volume growth, while Infrastructure volumes fell in the low double-digit range amid pricing pressures and a temporary mining slowdown in China. Management expects an infrastructure volume recovery weighted toward the second half of fiscal 2027. Demand signals across aerospace, defense, energy, and power generation will help show whether Kennametal can maintain momentum beyond the raw material-driven boost. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Exploring Tickeron AI Tools
I often turn to Tickeron’s AI-powered tools when reviewing earnings reports like this one. The AI Screener lets me filter industrial names by fundamentals, patterns, and signals in a straightforward way, helping surface comparable opportunities without manual effort. It fits naturally into my process for tracking sectors like this.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
KMT's Indicator enters downward trend
The Aroon Indicator for KMT entered a downward trend on November 06, 2026. Tickeron's A.I.dvisor identified a pattern where the AroonDown red line was above 70 while the AroonUp green line was below 30 for three straight days. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options. A.I.dvisor looked at 202 similar instances where the Aroon Indicator formed such a pattern. In 136 of the 202 cases the stock moved lower. This puts the odds of a downward move at 67%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on November 03, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on KMT as a result. In 54 of 92 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 59%.
The Moving Average Convergence Divergence Histogram (MACD) for KMT turned negative on October 14, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 52 similar instances when the indicator turned negative. In 35 of the 52 cases the stock turned lower in the days that followed. This puts the odds of success at 67%.
KMT moved below its 50-day moving average on November 04, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for KMT crossed bearishly below the 50-day moving average on October 27, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 10 of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 62%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where KMT declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 64%.
Bullish Trend Analysis
The RSI Indicator demonstrates that the ticker has stayed in the oversold zone for 2 days, which means it's wise to expect a price bounce in the near future.
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
Following a +1.39% 3-day Advance, the price is estimated to grow further. Considering data from situations where KMT advanced for three days, in 194 of 309 cases, the price rose further within the following month. The odds of a continued upward trend are 63%.
KMT may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 39 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.119) is normal, around the industry mean (3.134). KMT has a moderately low P/E Ratio (5.122) as compared to the industry average of (22.348). KMT's Projected Growth (PEG Ratio) (0.050) is slightly lower than the industry average of (1.020). KMT has a moderately high Dividend Yield (0.035) as compared to the industry average of (0.018). P/S Ratio (0.976) is also within normal values, averaging (2.217).
The Tickeron SMR rating for this company is 40 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 79 (best 1 - 100 worst), indicating slightly worse than average price growth. KMT’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is 96 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. KMT’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 70, placing this stock worse than average.
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
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General Information
a manufacturer of cutting tools and tooling systems
Industry ToolsHardware
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