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Kennametal Whiffs on Earnings

Kennametal (NYSE: KMT  ) reported earnings on Jan. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Kennametal met expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue dropped slightly and GAAP earnings per share dropped significantly.

Margins contracted across the board.

Revenue details
Kennametal tallied revenue of $633.1 million. The 13 analysts polled by S&P Capital IQ expected to see a top line of $641.5 million on the same basis. GAAP reported sales were 1.3% lower than the prior-year quarter's $641.7 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.50. The 15 earnings estimates compiled by S&P Capital IQ predicted $0.64 per share. GAAP EPS of $0.52 for Q2 were 43% lower than the prior-year quarter's $0.91 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 31.5%, 460 basis points worse than the prior-year quarter. Operating margin was 10.5%, 420 basis points worse than the prior-year quarter. Net margin was 6.7%, 480 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $734.0 million. On the bottom line, the average EPS estimate is $0.98.

Next year's average estimate for revenue is $2.79 billion. The average EPS estimate is $3.34.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 302 members out of 314 rating the stock outperform, and 12 members rating it underperform. Among 117 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 114 give Kennametal a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Kennametal is outperform, with an average price target of $41.77.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. TMFDisclosureHere

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