Covid-19 Just The Latest Of Many Challenges For Kennametal

It’s been a while since I’ve written on the perpetually-restructuring Kennametal (KMT), partly because it gets tedious writing about an underperforming company with serious long-term structural and competitive challenges. There have been some periods of outperformance since that last article, but for the last year or so, it’s been a rough go for the company and its shareholders.

It’s almost three and a half years later, but my investment conclusion hasn’t changed much. The shares do look undervalued even based on what I think are fairly conservative assumptions, but it’s hard to get excited about owning a company that you don’t believe in on a long-term structural basis. Does Kennametal have potential as a way to play the coming short-cycle recovery? Definitely. Would I be surprised if the shares were 10% to 25% higher a year from now? Not at all. But is this a name I’d buy and just lock away in the vault for five or more years? Also “not at all”.

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Covid-19 Just The Latest Of Many Challenges For Kennametal