Reflecting On Professional Tools and Equipment Stocks’ Q2 Earnings: Kennametal (NYSE:KMT)

As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the professional tools and equipment industry, including Kennametal (NYSE:KMT) and its peers.

Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand. Some professional tools and equipment companies also provide software to accompany measurement or automated machinery, adding a stream of recurring revenues to their businesses. On the other hand, professional tools and equipment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 10 professional tools and equipment stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 0.9% below.

Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data, and while some professional tools and equipment stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.5% since the latest earnings results.

Kennametal (NYSE:KMT)

Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE:KMT) is a provider of industrial materials and tools for various sectors.

Kennametal reported revenues of $543.3 million, down 1.3% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ operating margin estimates and optimistic earnings guidance for the next quarter.

"Thanks to the hard work and diligence of our global team, we delivered a strong finish in fiscal year 2024 despite persistent market softness, foreign exchange headwinds and a natural disaster affecting our facility in Arkansas. We successfully met our revenue and EPS outlook and generated $277 million in cash from operations, the highest as a percent of sales in over 25 years," said Sanjay Chowbey, President and CEO.

Interestingly, the stock is up 3.1% since reporting and currently trades at $24.73.

Is now the time to buy Kennametal? Access our full analysis of the earnings results here, it’s free.

Best Q2: Hyster-Yale Materials Handling (NYSE:HY)

Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE:HY) designs, manufactures, and sells materials handling equipment to various sectors.

Hyster-Yale Materials Handling reported revenues of $1.12 billion, up 2.5% year on year, outperforming analysts’ expectations by 3.5%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.

Hyster-Yale Materials Handling pulled off the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 16.9% since reporting. It currently trades at $57.82.

Is now the time to buy Hyster-Yale Materials Handling? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Fortive (NYSE:FTV)

Taking its name from the Latin root of "strong", Fortive (NYSE:FTV) manufactures products and develops industrial software for numerous industries.

Fortive reported revenues of $1.55 billion, up 1.7% year on year, in line with analysts’ expectations. It was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations and a miss of analysts’ organic revenue estimates.

As expected, the stock is down 5.4% since the results and currently trades at $72.51.

Read our full analysis of Fortive’s results here.

ESAB (NYSE:ESAB)

Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE:ESAB) manufactures and sells welding and cutting equipment for numerous industries.

ESAB reported revenues of $707.1 million, down 1.9% year on year. This result beat analysts’ expectations by 2.6%. Aside from that, it was a strong quarter as it also logged an impressive beat of analysts’ operating margin estimates but a miss of analysts’ organic revenue estimates.

The stock is down 1.7% since reporting and currently trades at $96.59.

Read our full, actionable report on ESAB here, it’s free.

Stanley Black & Decker (NYSE:SWK)

Based in Connecticut, Stanley Black and Decker (NYSE:SWK)

Stanley Black & Decker reported revenues of $4.02 billion, down 3.2% year on year. This print was in line with analysts’ expectations. Overall, it was a very strong quarter as it also produced an impressive beat of analysts’ earnings and operating margin estimates.

The stock is up 1.1% since reporting and currently trades at $97.50.

Read our full, actionable report on Stanley Black & Decker here, it’s free.

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