Kennametal (KMT) Stock Forecast & Price Target

Kennametal is well positioned because its tungsten supply is diversified through Bolivia and recycling, with long-term sourcing agreements and owned processing assets that have not been interrupted, reducing exposure to Chinese supply risk and supporting product availability. The company is also benefiting from an improving industrial cycle, with aerospace and defense contributing about 12% of sales and energy about 13%, while FY3Q26 marked a second consecutive quarter of organic volume growth of roughly 2% y/y after about 9 quarters of declines. Management’s restructuring plan should add further support, with about $30M of savings targeted during FY26 and another $35M in FY28, and the setup for free cash flow normalization into FY2H27 could enhance capital returns and earnings power.

Kennametal is facing a negative fundamental setup because much of its recent EPS strength is driven by temporary tungsten price/cost timing rather than durable demand, with FY26 adj. EPS of $3.75-$4.00 implying only $1.30-$1.55 of “core” earnings after stripping out about $2.45 of transitory benefit. Modest volume growth is being overwhelmed by inflationary wage and general cost pressures, while higher debt, interest expense, and rising working-capital needs are pressuring cash flow, with FY26 free operating cash flow guided at -30% of adj. net income. In addition, structurally challenged end markets like energy and automotive may limit long-term outgrowth, and if tungsten stabilizes, the expected roll-off in pricing could expose weaker underlying profitability and lead to negative estimate revisions.