Here's Why You Should Retain Kennametal Stock in Your Portfolio

Core Viewpoint - Kennametal Inc. is positioned for growth due to strong performance in its Infrastructure segment and shareholder-friendly policies [1][4][6] Company Overview - Kennametal, based in Latrobe, PA, manufactures and distributes high-speed metal cutting tools, tooling systems, and wear-resistant parts, serving various end markets including aerospace, transportation, and energy [2] Business Strength - The Infrastructure segment is performing well, driven by increased demand in aerospace & defense and energy markets, despite softness in other areas [4] - Positive trends in key markets include rising U.S. and international defense spending and digitalization [4] Product Development - The company benefits from a diversified portfolio and ongoing investments in product development, with notable new products introduced [5] - A new metal cutting inserts manufacturing facility was established in Bengaluru, India, to meet growing demand [5] Shareholder Policies - Kennametal is committed to rewarding shareholders through dividends and share buybacks, distributing $15.6 million in dividends and repurchasing $15 million in shares in Q1 of fiscal 2025 [6] - In fiscal 2024, the company distributed $63.4 million in dividends and repurchased $65.4 million in shares [6] Segmental Weakness - The Metal Cutting segment is experiencing revenue declines due to decreased demand in the transportation market and lower project activity in general engineering [7] - Revenue expectations for fiscal 2025 are projected to be between $2.0 billion and $2.1 billion, indicating a year-over-year decrease of 1.4% at the midpoint [7] Cost Challenges - Kennametal faces high operating expenses, with operating expenses as a percentage of total revenues rising to 23.2% [8] - The operating margin decreased by 130 basis points in Q1 of fiscal 2025 due to higher wages and inflationary pressures [9]