Trade-Ideas LLC identified

Kennametal

(

KMT

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Kennametal as such a stock due to the following factors:

  • KMT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $47.0 million.
  • KMT has traded 163,298 shares today.
  • KMT is up 3.2% today.
  • KMT was down 12.3% yesterday.

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More details on KMT:

Kennametal Inc. manufactures and supplies tooling, engineered components, and advanced materials consumed in production processes worldwide. It operates through two segments, Industrial and Infrastructure. The stock currently has a dividend yield of 3.9%. Currently there are 4 analysts that rate Kennametal a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Kennametal has been 1.1 million shares per day over the past 30 days. Kennametal has a market cap of $1.6 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.74 and a short float of 6.7% with 1.89 days to cover. Shares are down 49.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Kennametal as a

hold

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 21.6%. Since the same quarter one year prior, revenues fell by 20.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • KENNAMETAL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, KENNAMETAL INC swung to a loss, reporting -$4.72 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus -$4.72).
  • The gross profit margin for KENNAMETAL INC is currently lower than what is desirable, coming in at 32.08%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.12% trails that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 115.8% when compared to the same quarter one year ago, falling from $39.49 million to -$6.23 million.

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