Filing Flows › Companies › Kennametal › Analysis traps
Kennametal (KMT): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q1 FY27, to Sep 30, 2026, filed Nov 4, 2026; rules v1.1
Kennametal (KMT): 1 rule of 10 triggered on the filings to Sep 30, 2026: low P/E at a cyclical peak = undervalued. 1 to review; 2 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Low P/E at a cyclical peak = undervalued Triggered · severity high · confidence medium
The shares trade at 3.0× this year's net income of $599M, but that profit is at a high: the median of the last eight fiscal years is $118M, on which the same market value is 15.2×. A low multiple of peak profit is not a low multiple of normal profit.
Innocent reading: The business has changed for good (a merger, a new line, a pricing regime) and the old years are not its normal.
A precise DCF value = the true value To review · confidence high
The DCF's point value is 315.16 a share (price 23.00); 80% of it is the terminal value, a number about years no one has seen. Moving wacc by ±1 pt alone takes it from 259.74 to 398.50; across every method the research ran the range is 12 to 606. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence high
Free cash flow did not rise ($119M → −$81M): the trap does not arise.
The figures and how they are read
| Fiscal year before | FY25 |
| Fiscal year | FY26 |
| Operating cash flow, year before | $208M |
| Operating cash flow | −$4M |
| Capex, year before | $89M |
| Capex | $77M |
| Free cash flow, year before | $119M |
| Free cash flow | −$81M |
| Change in FCF | −$200M |
| Change in capex | −$12M |
| Working capital: change in its cash contribution | −$556M |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY26 (cash flow statement, fiscal year) · FY25 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 1.5% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY26 |
| Stock compensation | $35M |
| Revenue | $2.4B |
| SBC / revenue | +1.5% |
| Buybacks | $10M |
| Buybacks / SBC | 0.3 |
| Diluted shares, year before | 77.9M shares |
| Diluted shares | 77.4M shares |
| Diluted shares: change | -0.6% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY26 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 49% against revenue 54% in Q1 FY27; DSO 50 against a median of 50: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q1 FY27 |
| Revenue, year over year | +54.3% |
| Receivables, year over year | +49.2% |
| Quarter before | Q4 FY26 |
| Revenue y/y, quarter before | +42.6% |
| Receivables y/y, quarter before | +38.3% |
| Days sales outstanding | 50.2 |
| DSO, median of eight quarters | 50.4 |
| Receivables | $430M |
| Revenue | $768M |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q1 FY27 (receivables and revenue) · Q1 FY26 (the same quarter a year earlier)
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Insufficient data
neither a maturity table nor the current portion of debt is on file
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 1048% and net income rose 1066% in Q1 FY27; the share count rose 1.7%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q1 FY27 |
| Quarter before | Q1 FY26 |
| EPS, year before | $0.30 |
| EPS | $3.48 |
| Net income, year before | $23M |
| Net income | $272M |
| Diluted shares, year before | 76.8M shares |
| Diluted shares | 78.1M shares |
| EPS growth | +1047.5% |
| Net income growth | +1065.7% |
| Diluted shares: change | +1.7% |
| eps from profit | $3.23 |
| eps from share count | -$0.06 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q1 FY27 (net income, diluted shares, EPS) · Q1 FY26 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Triggered severity high · confidence medium
The shares trade at 3.0× this year's net income of $599M, but that profit is at a high: the median of the last eight fiscal years is $118M, on which the same market value is 15.2×. A low multiple of peak profit is not a low multiple of normal profit.
The figures and how they are read
| market value | $1.8B |
| net income ttm | $599M |
| pe ttm | 3.00 |
| net income median fy | $118M |
| pe mid cycle | 15.20 |
| net income peak fy | $342M |
| years | FY19 / 242.0; FY20 / -6.0; FY21 / 54.0; FY22 / 145.0; FY23 / 118.0; FY24 / 109.0; FY25 / 93.0; FY26 / 342.0 |
| down years in window | 4 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q1 FY27 (net income, trailing twelve months)
What would explain it innocently
- The business has changed for good (a merger, a new line, a pricing regime) and the old years are not its normal
- The market is right that profit will fall, and the price already says so
- Capacity has left the industry, so the cycle's trough is higher than before
What to look for in the filing
- Where the industry's prices and volumes stand against their own history
- Capacity on order across the industry
- Management's view of the cycle in the MD&A
What would show the trap does not apply
- Profit holds at this level through the next two years (the eight-year peak was a new base, not a top)
- The industry's capacity and prices stay where they are rather than reverting
Look again: next filing.
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 315.16 a share (price 23.00); 80% of it is the terminal value, a number about years no one has seen. Moving wacc by ±1 pt alone takes it from 259.74 to 398.50; across every method the research ran the range is 12 to 606. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 315.16 |
| price | 23.00 |
| terminal value share | +79.9% |
| swing by input | WACC / ±1 pt / 259.74 / 398.5; Revenue growth (each year) / ±5 pts / 257.99 / 382.2; Operating margin / ±3 pts / 283.92 / 346.39; Terminal growth / ±0.5 pt / 295.16 / 339.57 |
| range all methods | 12.25; 606.22 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Kennametal: cash flow →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.