Perpetually Restructuring Kennametal Tries To Recapture Lost Glory

Kennametal (NYSE:KMT) has been in a state of almost perpetual restructuring since 2007, but there's little to show for it as revenue and margins are both lower today than back in 2007. While the shares are up over the last 10 years, they are only by about 10% (versus a greater than 60% gain for the S&P 500) and due in part to the strong run that stocks have enjoyed since the U.S. presidential election.

New management is going about things in a much smarter way, and I think it is reasonable to think that the returns from this latest restructuring program will be more significant. On the other hand, Kennametal has lost a lot of shares (and a lot of credibility with the Street), its end markets are changing, and management's projections may be bold to the point of unrealistic. While I do think recovering end markets and a better strategy can drive above-market growth and double-digit FCF growth, today's valuation already seems to give a pretty hefty benefit of the doubt to the company.

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Perpetually Restructuring Kennametal Tries To Recapture Lost Glory