Kennametal Losing Grip in Metal Cutting: What's Impeding Its Growth?

Kennametal Inc. KMT is witnessing persistent weakness in the Metal Cutting segment. The decrease in demand across the transportation end market, owing to continued OEM production softness, mainly in Europe and the Middle East region, is affecting the segment’s organic revenues. Also, weakness in the general engineering end market due to lower industrial production, along with lower mining activity in the Asia Pacific and the Americas regions, is ailing the Metal Cutting segment. In the fourth quarter of fiscal 2025 (ended June 30, 2025), the segment’s organic revenues decreased 4% year over year.Lower energy activity in EMEA and a decrease in rig counts in the Americas region also remain concerning. The imposition of tariffs on all steel and aluminum imports might also continue to inflate material and production costs, particularly in the transportation market, thereby leading to higher prices. The risk of retaliatory tariffs adds to the unpredictability. The broader tariff impact could significantly reduce U.S. auto industry sales, thereby adversely affecting the transportation end market. This is expected to hurt Kennametal’s Metal Cutting segment’s top-line performance in the quarters ahead.Also, weakness in the general engineering market, arising from declines in industrial activity, remains concerning for its Infrastructure segment. Owing to the prevailing softness across its businesses, the company expects revenues to be in the range of $1.95-$2.05 billion for fiscal 2026, implying a year-over-year decrease of 1.6% at the midpoint.Segment Snapshot of KMT’s PeersAmong its major peers, Nordson Corporation NDSN is benefiting from strength in the Advanced Technology Solutions segment, organic sales from which increased 8% year over year in the first nine months of fiscal 2025 (ended July 31, 2025). Growing demand for Nordson’s electronic processing and optical sensors, and electronics dispensing product lines within the semiconductor and electronics end markets is supporting the segment’s performance.It's another peer, ITT Inc. ITT is witnessing strong demand for its brake components and specialized sealing solutions, shock absorbers and damping technologies in OEM and rail transportation markets. This is likely to drive ITT’s Motion Technologies segment’s performance in the quarters ahead. For 2025, ITT expects its overall organic sales to increase 3-5% from the year-ago level.KMT’s Price Performance, Valuation and EstimatesShares of Kennametal have lost 6.2% in the past six months against the industry’s growth of 3.1%.Image Source: Zacks Investment ResearchFrom a valuation standpoint, KMT is trading at a forward price-to-earnings ratio of 18.27X, above the industry’s average of 18.05X. Kennametal carries a Value Score of C.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for KMT’s fiscal 2026 earnings has declined 22.3% over the past 60 days.Image Source: Zacks Investment ResearchThe company currently carries a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>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 ITT Inc. (ITT): Free Stock Analysis Report Nordson Corporation (NDSN): Free Stock Analysis Report Kennametal Inc. (KMT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks