Kennametal Inc. Just Recorded A 60% EPS Beat: Here's What Analysts Are Forecasting Next
A week ago, Kennametal Inc. (NYSE:KMT) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 2.5% to hit US$485m. Kennametal also reported a statutory profit of US$0.26, which was an impressive 60% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Kennametal
Taking into account the latest results, the current consensus from Kennametal's nine analysts is for revenues of US$1.99b in 2022, which would reflect a solid 17% increase on its sales over the past 12 months. Per-share earnings are expected to leap 1,118% to US$1.49. In the lead-up to this report, the analysts had been modelling revenues of US$1.99b and earnings per share (EPS) of US$1.49 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$36.89. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Kennametal, with the most bullish analyst valuing it at US$48.00 and the most bearish at US$29.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Kennametal shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kennametal's past performance and to peers in the same industry. For example, we noticed that Kennametal's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 13% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 2.1% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.1% per year. So it looks like Kennametal is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Kennametal analysts - going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 5 warning signs for Kennametal (1 is concerning!) that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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