Kennametal (KMT:NYS) Fundamental Valuation Report

Fundamental Valuation Report


Industrials:Tools & Accessories

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$39.46 (USD) 09/11/2018

Weighted Valuation
$41.53 (USD)

Overall Rating
Undervalued by 5.2%

Valuation Models Analyst Consensus: $45.67 (USD)
(in order of importance) Adjusted Book Value: $33.09 (USD)
Multiples: $45.98 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (KMT:NYS USD)

Price 39.46
Range 39.02 – 40.82
52 week 33.21 – 51.92
Open 40.68
Vol / Avg. 704873/1.09M
Mkt cap 3.24B
P/E 15.06
Div/yield 0.80/0.02
EPS 2.42
Shares 82.1M
Beta 2.12

Company Description

Kennametal Inc is a manufacturer of metalworking tools and wear-resistant engineered components and coatings. The company operates two business segments: industrial and infrastructure. The industrial segment offers technology and customised solutions used in the manufacture of engines, airframes, automobiles, trucks, ships and other types of industrial equipment. In the infrastructure segment, Kennametal offers products and solutions such as road milling, trenching, surface mining, and underground mining safety used in the oil and gas, power generation and chemicals, underground and surface mining, and highway construction and road maintenance industries. The largest end market for Kennemetal is the United States of America.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for KMT:NYS

Using a discounted cash flow model we generated an intrinsic value of $19.52 (USD) for KMT:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

KMT:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $19.52 1% 5% 1% 5%
WACC (or Ke) 13.71 $22.46 $17.09
Terminal Growth Rate 3.00 $17.50 $21.96
Tax Rate 0.25 $21.76 $17.28
Cash Flow 495,842,000 $17.58 $21.46
Capital Expenditures -115,063,400 $19.14 $19.90
Long Term Debt 695,408,000 $19.94 $19.10

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $52.84 (USD) for KMT:NYS. We also generated a valuation of $56.43 (USD) using other metrics and comparables.
The comparable companies were Proto Labs (PRLB:NYS), RBC Bearings (ROLL:NAS), Snap-on (SNA:NYS), Simpson Manufacturing Co (SSD:NYS) and Toro (TTC:NYS).

Company KMT:NYS End Date Value
Earnings/Share $2.62 (USD)
Book Value/Share $14.55 (USD)
Sales/Share $28.61 (USD)
Cash Flow/Share $3.35 (USD)
EBITDA/Share $4.98 (USD)
Price Based on Comps Adjustment Factor (%)
$76.25 (USD) -43.3
$72.89 (USD) -30.2
$114.58 (USD) -25.7
$58.64 (USD) -13.9
$84.62 (USD) -66.8
14.65 PE Ratio 29.10 45.42 38.86 13.96 24.29 22.99
2.44 PB Ratio 5.01 6.09 4.22 2.73 2.87 9.14
1.24 PS Ratio 4.00 7.63 5.26 2.17 2.58 2.40
10.58 PCF Ratio 21.06 30.23 29.05 11.94 16.17 17.93
8.09 EV to EBITDA 16.98 27.80 22.24 9.40 12.21 13.23


Using a multiples approach we generated a valuation of  $45.98 (USD) for KMT:NYS

Company KMT:NYS End Date Value
Earnings/Share $2.62 (USD)
Book Value/Share $14.55 (USD)
Sales/Share $28.61 (USD)
Cash Flow/Share $3.35 (USD)
EBITDA/Share $4.98 (USD)
Price Based on Comps Adjustment Factor
$58.60 (USD) 0
$33.16 (USD) 0
$33.88 (USD) 0
$36.84 (USD) 0
$67.42 (USD) 0
Ratios Ratio Average
PE Ratio 22.37
PB Ratio 2.28
PS Ratio 1.18
PCF Ratio 11.00
EV to EBITDA 13.53

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  KMT:NYS for the last 10 years was  2.20

We ran the Adjusted Book Value for  KMT:NYS and generated a book value of  $15.04 (USD)
By multiplying these we get an adjusted valuation of  $33.09 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for KMT:NYS. The 3 analysts have a concensus valuation for KMT:NYS for 2019 of $45.67 (USD).

KMT:NYS Kennametal

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 0 1 3.6667 Outperform 2018-11-8

Current Price: 39.46 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 3.14 3.45 3.25
# EPS Analysts 2 2 1
Mean Revenue 2,519.20 2,549.00 2,524.00
# Revenue Analysts 2 2 1
Mean Target Price 45.67
Mean Cash Flow 4.11 4.53 4.51
Mean EBITDA 482.10 471.90 481.40
Mean Net Income 263.10 285.50 270.50
Mean Debt Outstanding 335.80 176.90 -276.10
Mean Tax Rate 24.10 22.00
Mean Growth Rate
Mean Capital Expenditure 168.10 130.60 62.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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