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TheStreet Open House

Why Kennametal (KMT) Is Down Today

NEW YORK (TheStreet) -- Kennametal  (KMT) was falling 7.98% to $43.88 on Thursday afternoon after the tool and industrial material supplier reported second-quarter results that were below analysts' expectations.

The company reported adjusted earnings per share of 52 cents, which landed short of analysts' projections of 61 cents. The EPS was 30 cents compared to 52 cents from the same quarter one year earlier. The company did report a 9% year-over-year sales increase to $690 million, though Kennametal attributed this to its 2% organic sales growth and and a 7% increase from the acquisition of Tungsten Business Materials in November 2013.

Kennametal also reduced its EPS guidance for the fiscal year 2014 to the range of $2.60 to $2.75 from its previous expectation of $2.90 to $3.05. The reduction stems from the TMB acquisition.

"During the December quarter, we completed our recently announced acquisition of the Tungsten Materials Business," said President and CEO Carlos Cardoso in the company's statement.

"This transaction represents a highly complementary fit with Kennametal in product portfolio, strategic assets and talent base. We will continue to focus on bringing productivity improvements and outstanding service to our customers, which now include those from the acquired business. As we move forward, we remain committed to executing our strategies and maximizing margin expansion opportunities to deliver shareholder value."

TheStreet Ratings team rates KENNAMETAL INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate KENNAMETAL INC (KMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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