• If you are wondering whether Kennametal’s current share price still offers value, you are not alone. This article is built to help you unpack what that price really implies.
• The stock last closed at US$40.32, with returns of 17.2% over 7 days, 38.2% over 30 days, 39.1% year to date, 87.6% over 1 year, 56.3% over 3 years, and 24.7% over 5 years. This raises fair questions about how much of the story is already reflected in the price.
• Recent coverage around Kennametal has focused on its position in the capital goods space and how its tools and wear resistant products fit into industrial demand, giving investors more context as they weigh these recent price moves. This backdrop is important because it shapes expectations around how resilient or cyclical the business might be viewed over time.
• On our checks, Kennametal currently scores a 5 out of 6 valuation score. This suggests that several commonly used models see room for upside, but the real question is which approach you should trust most and how a more complete valuation framework at the end of this article can sharpen your view.

Approach 1: Kennametal Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and then discounting those back into a single present value figure.

For Kennametal, the model used is a 2 Stage Free Cash Flow to Equity approach, based on reported and projected Free Cash Flow, or FCF, in $. The latest twelve month FCF is US$88.6 million. Analyst inputs cover the next few years, and Simply Wall St then extrapolates further out, with ten year FCF projections running from US$109.5 million in 2026 up to US$578.8 million in 2035.

Putting these projections together, the DCF model arrives at an estimated intrinsic value of US$94.08 per share, compared with the recent share price of US$40.32. On this model, Kennametal appears 57.1% undervalued, indicating that the current price is below the level implied by these cash flow projections.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Kennametal is undervalued by 57.1%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Approach 2: Kennametal Price vs Earnings

For a profitable business like Kennametal, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It bundles together what the market is willing to pay given expectations for growth, the stability of those earnings and the risks investors see in the business.

In simple terms, higher expected growth and lower perceived risk can justify a higher P/E, while slower growth or higher uncertainty tend to point to a lower, more cautious P/E range. Kennametal currently trades on a P/E of 27.9x. That sits slightly below the Machinery industry average of 29.2x and well below the peer group average of 52.1x. This suggests the market prices Kennametal more conservatively than many peers.

Simply Wall St’s Fair Ratio for Kennametal is 28.3x. This is a proprietary estimate of what a “normal” P/E might be, given the company’s earnings growth profile, profit margins, industry, market value and risk factors, rather than just a simple comparison to peers. Because it folds in these company specific drivers, it can provide a more tailored anchor than raw industry or peer averages. With the current P/E of 27.9x sitting close to the Fair Ratio of 28.3x, the shares appear priced around the level this framework would suggest.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Kennametal Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company tied directly to the numbers you think are reasonable for its future revenue, earnings, margins and fair value.

A Narrative on Simply Wall St connects three things in a straight line: your view of Kennametal’s business, a forecast built from your assumptions, and a fair value that you can compare to today’s share price.

You can create and explore Narratives on the Community page, where millions of investors share their views. Each Narrative is automatically updated when new information such as news or earnings is added so your fair value stays aligned with the latest data.

Narratives can also differ a lot. For example, one Kennametal Narrative on the platform might see a relatively low fair value based on cautious revenue and margin assumptions, while another might set a much higher fair value using more optimistic forecasts, giving you a clear sense of how your own view compares.

Do you think there's more to the story for Kennametal? Head over to our Community to see what others are saying!

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.