KMT
Kennametal Inc.
$36.08
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 30.0% above fair value
You pay
$36.08
Bear
$22.21
Fair
$27.76
Bull
$33.31
Bear
$22.21
-38.4%
$1.63 × 12x P/E
Fair
$27.76
-23.1%
$1.63 × 15x P/E
Bull
$33.31
-7.7%
$1.63 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
22.1x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $37.50 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $27.76 per share.
Warnings
The company's reported profits differ from official accounting profits by 36%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $37.50 (from 23 analysts). Our estimate is 35% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples