Kennametal (NYSE:KMT) Reports Strong Q1 CY2026, Stock Jumps 11.1%

Industrial materials and tools company Kennametal (NYSE:KMT) reported Q1 CY2026 results exceeding the market’s revenue expectations, with sales up 21.8% year on year to $592.6 million. The company’s full-year revenue guidance of $2.34 billion at the midpoint came in 5.2% above analysts’ estimates. Its non-GAAP profit of $0.77 per share was 14.6% above analysts’ consensus estimates.

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Company Overview

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.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Kennametal’s sales grew at a tepid 4.6% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Kennametal’s recent performance shows its demand has slowed as its annualized revenue growth of 2% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Kennametal’s organic revenue averaged 1.9% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Kennametal reported robust year-on-year revenue growth of 21.8%, and its $592.6 million of revenue topped Wall Street estimates by 4.8%.

Looking ahead, sell-side analysts expect revenue to grow 12.1% over the next 12 months, an improvement versus the last two years. This projection is admirable and implies its newer products and services will fuel better top-line performance.

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Operating Margin

Kennametal has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.3%, higher than the broader industrials sector.

Analyzing the trend in its profitability, Kennametal’s operating margin decreased by 1.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q1, Kennametal generated an operating margin profit margin of 13.4%, up 4.3 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Kennametal’s EPS grew at 23.8% compounded annual growth rate over the last five years, higher than its 4.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Kennametal’s earnings to better understand the drivers of its performance. A five-year view shows that Kennametal has repurchased its stock, shrinking its share count by 8.1%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Kennametal, its two-year annual EPS growth of 14.3% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, Kennametal reported adjusted EPS of $0.77, up from $0.47 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Kennametal’s full-year EPS of $1.92 to grow 46.9%.

Key Takeaways from Kennametal’s Q1 Results

We were impressed by how significantly Kennametal blew past analysts’ organic revenue expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 11.1% to $41.69 immediately following the results.

Kennametal may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).