SDVKY - Kennametal Seems To Be Going Nowhere Fast
2024-06-21 09:15:38 ET
Summary
- Kennametal's shares have underperformed due in part to exposure to weakening short-cycle industrial markets and longer-cycle heavy machinery markets.
- Aerospace is about the only market Kennametal serves where the outlook supports solid growth over the next 12 months, as heavy machinery and short-cycle industrial could weaken further.
- Management has talked for some time about harnessing innovation to drive differentiated products, above-market growth, and margin leverage, but progress has been mixed at best.
- Kennametal's leverage to industrial production makes it a way to play a more bullish stance on a short-cycle recovery, but a longer-term buy-and-hold thesis is a bigger stretch.
This isn’t a great time to be exposed to short-cycle industrial or machinery end-markets, and that’s around 80% to 85% of Kennametal ’s ( KMT ) business. It’s not so surprising, then, that the shares are down about 15% over the past year, underperforming the broader industrial sector by almost 30%, but also other underperforming shorter-cycle industrials like Lincoln Electric ( LECO ) and Sandvik ( OTCPK:SDVKY )....
Kennametal Seems To Be Going Nowhere Fast