Kennametal (KMT) is back on investors’ radar after the company announced that long serving director Joseph Alvarado will become Chairman of the Board in October 2026, succeeding retiring chair William M. Lambert.

The board change comes as Kennametal’s share price sits at US$35.61, with a 1 day share price return of 0.82% and a year to date share price return of 22.84%, while the 1 year total shareholder return of 45.19% points to stronger momentum over a longer window despite weaker 90 day share price performance.

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Bulls point to Kennametal’s recent shareholder returns and experienced incoming chair. Bears focus on softer 90 day performance and a share price sitting slightly above analyst targets. Which side does the current valuation support?

Most Popular Narrative: 4.2% Undervalued

The most followed narrative currently places Kennametal’s fair value at $37.19, slightly above the last close at $35.61. This puts the boardroom reshuffle against a valuation backdrop that is not stretched but not disconnected either.

The company is actively rightsizing capacity and executing structural cost reductions (including plant closures and workforce optimization), which are projected to produce $125 million in run-rate savings by fiscal 2028, supporting significant net margin improvement as volume returns.

Want to understand why this narrative still sees upside at a price close to analyst targets? The story leans heavily on future margins, mid single digit earnings growth, and a more restrained earnings multiple. The full narrative sets out how those moving parts combine into the current fair value call.

Result: Fair Value of $37.19 (UNDERVALUED)

However, Kennametal’s story can shift quickly if end markets like Transportation and Oil & Gas stay weak or if expected cost savings fail to materialize.

Another View: Kennametal Through The Cash Flow Lens

The analyst narrative around Kennametal leans on earnings and multiples, yet the Simply Wall St DCF model tells a very different story. On that view, the stock at $35.61 sits well above an estimated future cash flow value of $16.79, which points to an overvalued outcome instead of 4.2% undervalued. Which lens do you trust more when the gap is this wide?

For a closer look at how those long range cash flows are treated and discounted, you can walk through the full Simply Wall St DCF calculation step by step in the Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kennametal for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The split views on Kennametal raise a simple question: Are investors being too cautious or too optimistic right now about the balance of risks and rewards? Act quickly, review the data for yourself, and see how your take lines up with the 4 key rewards and 1 important warning sign.

Looking for more Kennametal style investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.