KMT Kennametal Inc.
$34.39
Stable Earnings Power 40%
P/Adj-EPS × Normalized Multiple
Moderate · Conviction

Overvalued

Trading 24.3% above fair value

You pay $34.39
Bear $22.13
Fair $27.66
Bull $33.19
Bear $22.13 -35.7% $1.63 × 12x P/E
Fair $27.66 -19.6% $1.63 × 15x P/E
Bull $33.19 -3.5% $1.63 × 18x P/E

Key Value Driver

Normalized P/E multiple (15x base case)

Implied Market Multiple 21.0x

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 $37.10 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $27.66 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 $37.10 (from 23 analysts). Our estimate is 34% 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