Kennametal Inc. KMT is benefiting from solid demand across both its segments. Its investment in product development and shareholder-friendly policies also bodes well.
KMT currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the firm for a while now.
Solid Momentum in Metal Cutting Segment: Kennametal’s Metal Cutting business continues to benefit from share gains, higher aerospace build rates and project wins in energy. In fourth-quarter fiscal 2026, its organic sales rose 22% year over year. On a constant-currency basis, the segment’s sales increased 36% in energy, 35% in aerospace & defense and 25% in general engineering end markets. The Metal Cutting segment’s growth was supported by data center power generation wins, higher aerospace build rates and indirect-channel share gains.
Recovery in Infrastructure Segment and Pricing Momentum: Kennametal’s Infrastructure segment is benefiting from pricing, share gains and project execution across several end markets. The segment’s organic sales rose 74% year over year in the fiscal fourth quarter. On a constant-currency basis, energy end market’s sales increased 135%, earthworks rose 76%, aerospace & defense advanced 63% and general engineering increased 37%. Earthworks end market’s growth reflected higher volume in surface mining and construction, including share gains tied to material availability. Energy end market’s growth was driven mainly by pricing in the Americas, while aerospace & defense end market benefited from pricing and strategic initiatives in the Americas and EMEA.
In the past year, the company’s shares have gained 54.4% compared with the industry‘s 9.8% growth.
Image Source: Zacks Investment Research
Innovation and Portfolio Investment: Kennametal continues to invest in product development, digital capabilities and higher-growth applications. In aerospace, the company is targeting a roughly $500 million market for cutting tools used on carbon fiber reinforced plastics, which it estimates will grow 9% annually through 2028. Kennametal is pursuing the opportunity through proprietary geometry and material science, a broader product portfolio, application engineering, channel relationships and a three-year innovation pipeline. KMT also highlighted a recent customer win after it supplied a superior composite-cutting product and guaranteed supply during a competitor disruption.
Shareholder Returns With Discipline: Kennametal continues to return cash through dividends while adjusting repurchases to protect liquidity. In fiscal 2026, the company paid $60.8 million in dividends and repurchased $10.1 million of shares, returning about $71 million to shareholders. Since the $200 million repurchase program was authorized in February 2024, the company has bought back about $70 million of stock. However, the company has paused further repurchases until cash flow turns positive as tungsten-related working capital remains elevated.
Other Stocks to Consider
Some other top-ranked companies are discussed below:
Helios Technologies HLIO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HLIO delivered a trailing four-quarter average earnings surprise of 13.1%. In the past 60 days, the Zacks Consensus Estimate for Helios Technologies’ 2026 earnings has increased 10%.
Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 4.3%.
The Zacks Consensus Estimate for AIT’s fiscal 2027 earnings has increased 1.4% in the past 60 days.
Crane Company CR presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for CR’s 2026 earnings has increased 0.4% in the past 60 days.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Kennametal Inc. (KMT): Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report
Crane Company (CR): Free Stock Analysis Report
Helios Technologies, Inc (HLIO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).