Kennametal (KMT) surges 8.3%: Is this an indication of further gains?

Zacks Zacks Investment Research

Kennametal (KMT - Free Report) shares rallied 8.3% in the last trading session to close at $33.28. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 5.5% gain over the past four weeks.

Kennametal’s rally is primarily driven by optimism about its strength in aerospace & defense, energy and general engineering markets. An increase in aerospace original equipment manufacturer build rates in the Americas region, easing supply-chain pressures and robust U.S. and international defense spending volumes bode well for the company. Also, strength in the energy market and signs of recovery in the general engineering market augur well.

This engineered products maker is expected to post quarterly earnings of $0.35 per share in its upcoming report, which represents a year-over-year change of +40%. Revenues are expected to be $509.48 million, up 5.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Kennametal, the consensus EPS estimate for the quarter has been revised 3.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on KMT going forward to see if this recent jump can turn into more strength down the road.

Kennametal is a member of the Zacks Manufacturing - Tools & Related Products industry. One other stock in the same industry, Stanley Black & Decker (SWK - Free Report) , finished the last trading session 0.6% higher at $82.9. SWK has returned 11.1% over the past month.

Stanley Black & Decker's consensus EPS estimate for the upcoming report has changed +3.6% over the past month to $1.27. Compared to the company's year-ago EPS, this represents a change of -14.8%. Stanley Black & Decker currently boasts a Zacks Rank of #4 (Sell).

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