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Kadant (KAI) Surges 3.4%: Is This an Indication of Further Gains?

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Kadant Inc. (KAI) shares ended the last trading session 3.4% higher at $175.04. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 5.5% loss over the past four weeks.

Kadant’s rally is largely driven by optimism around the stock’s strong momentum in the Industrial Processing segment, led by robust demand for both capital and parts. Solid orders for products and a high backlog level bode well.

This equipment supplier for the papermaking and paper recycling industries is expected to post quarterly earnings of $1.97 per share in its upcoming report, which represents a year-over-year change of -2%. Revenues are expected to be $219.37 million, up 12% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Kadant, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on KAI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Kadant is a member of the Zacks Manufacturing - General Industrial industry. One other stock in the same industry, RBC Bearings (ROLL), finished the last trading session 1.1% higher at $178.41. ROLL has returned 11.9% over the past month.

For RBC Bearings , the consensus EPS estimate for the upcoming report has changed +28.4% over the past month to $1.41. This represents a change of +35.6% from what the company reported a year ago. RBC Bearings currently has a Zacks Rank of #2 (Buy).

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