Q3 Earnings Highs And Lows: Kennametal (NYSE:KMT) Vs The Rest Of The Professional Tools and Equipment Stocks
As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the professional tools and equipment industry, including Kennametal (NYSE:KMT) and its peers.
Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand. Some professional tools and equipment companies also provide software to accompany measurement or automated machinery, adding a stream of recurring revenues to their businesses. On the other hand, professional tools and equipment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
The 10 professional tools and equipment stocks we track reported a slower Q3. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 3% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.3% since the latest earnings results.
Kennametal (NYSE:KMT)
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE:KMT) is a provider of industrial materials and tools for various sectors.
Kennametal reported revenues of $481.9 million, down 2.1% year on year. This print fell short of analysts’ expectations by 0.6%. Overall, it was a mixed quarter for the company with full-year EPS guidance exceeding analysts’ expectations but a significant miss of analysts’ adjusted operating income estimates.
"While we continue to generate strong cash flow from operations, softer market conditions in a number of our end markets have led sales to come in on the lower end of our expectations," said Sanjay Chowbey, President and CEO.
Kennametal Total Revenue
Kennametal achieved the highest full-year guidance raise of the whole group. Still, the market seems discontent with the results. The stock is down 7.6% since reporting and currently trades at $24.02.
Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE:ESAB) manufactures and sells welding and cutting equipment for numerous industries.
ESAB reported revenues of $673.3 million, down 1.1% year on year, outperforming analysts’ expectations by 8.9%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates.
ESAB Total Revenue
ESAB pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 7.6% since reporting. It currently trades at $119.94.
Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE:HY) designs, manufactures, and sells materials handling equipment to various sectors.
Hyster-Yale Materials Handling reported revenues of $1.02 billion, up 1.5% year on year, falling short of analysts’ expectations by 3.8%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
As expected, the stock is down 18.7% since the results and currently trades at $50.93.
Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE:MIDD) is a food service and equipment manufacturer.
Middleby reported revenues of $942.8 million, down 3.9% year on year. This result missed analysts’ expectations by 5.4%. Overall, it was a disappointing quarter as it also logged a significant miss of analysts’ EBITDA and EPS estimates.
Middleby had the weakest performance against analyst estimates among its peers. The stock is down 3.8% since reporting and currently trades at $135.10.
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Stanley Black & Decker reported revenues of $3.75 billion, down 5.1% year on year. This print missed analysts’ expectations by 1.4%. It was a slower quarter as it also recorded full-year EPS guidance missing analysts’ expectations and a slight miss of analysts’ organic revenue estimates.
Stanley Black & Decker had the slowest revenue growth among its peers. The stock is down 22.1% since reporting and currently trades at $80.20.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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