Kennametal Inc. (KMT) Shares Tank After Company Cuts Guidance


Kennametal Inc. (NYSE:KMT) is trading down significantly this afternoon, after the company cut their guidance for fiscal year 2016, a move that shows a lower demand for their products. The company cut their per share adjusted earnings expectations by 30-60% in comparision to their previous expectations of $1.50 to $1.70 per share.

“Our served end markets are experiencing significant volatility, and we are being challenged by the current global macroeconomic environment. As a result, our visibility into our end markets is poor and we have decided to reduce guidance for fiscal 2016,” said President and CEO Don Nolan in a statement. “In this difficult time of end-market weakness, we will focus on controlling what we can control by tightly managing our costs and working capital, while not losing the capability to respond when the markets recover.”

The Chinese market and the overall state of the coal mining market were the factors that the company says are effecting demand. It should be interesting to follow Kennametal Inc. (NYSE:KMT) as we see how large of an effect this latest guidance cut has for investors.The stock is down 15.88% or $4.06 following the news, hitting $21.51 per share. About 6.06M shares traded hands or 488.35% up from the average. KMT has declined 32.92% since May 12, 2015 and is downtrending. It has underperformed the S&P500 by 29.25%.

From a total of 5 analysts covering Kennametal Inc. (NYSE:KMT) stock, 1 rate it a “Buy”, 2 a “Sell”, and 2 a “Hold”. This means that 20% of the ratings are positive. The highest target price is $35 while the lowest target price is $23. The mean of all analyst targets is $28.40 which is 32.03% above today’s ($21.51) stock price. Kennametal Inc. was the topic of 9 analyst reports since August 3, 2015 according to the firm StockzIntelligence Inc. Bank of America downgraded shares on November 4 to a “Underperform” rating.

The institutional sentiment decreased to 1.02 in Q2 2015. It’s down 0.68, from 1.7 in 2015Q2. The ratio fall, as 43 funds sold all their Kennametal Inc. shares they owned while 68 reduced their positions. 22 funds bought stakes while 91 increased their total positions. Institutions now own 79.62 million shares which is 2.38% more than the previous share count of 77.77 million in 2015Q2.

Destrier Capital Management Llc holds 3.97% of its total portfolio in Kennametal Inc., equating to 542,655 shares. Tinicum Inc owns 321,600 shares representing 3.88% of their total US portfolio. Moreover, Ariel Investments Llc has 2.98% of their total portfolio invested in the company, equating to 9.61 million shares. The Pennsylvania-based Snow Capital Management Lp has a total of 1.87% of their portfolio invested in the stock. Quaker Capital Investments Llc, a Pennsylvania-based fund reported 122,642 shares owned.

Kennametal Inc. is a supplier of tooling, engineered components and advanced materials consumed in production processes. The company has a market cap of $1.99 billion. The Firm manages and reports its business in two divisions: Industrial and Infrastructure. It currently has negative earnings. The Firm provides wear-resistant products, application engineering and services backed by material science, serving clients across diverse sectors of industrial production, transportation, earthworks, energy, infrastructure and aerospace.