Kadant Inc (KAI) stock analysis

P/E below its 5-year median

Kadant's P/E of 30.5 is below its own 5-year median of 31.0.

P/E below the industry

Kadant's P/E of 30.5 is below the Special Industry Machinery, except Metalworking median of 32.8.

EV/EBITDA below its 5-year median

Kadant's EV/EBITDA of 15.9 is below its 5-year median of 17.2.

P/B above the industry

Kadant's price-to-book of 3.39 is above the Special Industry Machinery, except Metalworking median of 2.10.

Trading above fair value

The share price of $302.17 is above our fair value estimate of $294.68.

Margin of safety under 20%

The price is 2.5% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 5.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -5.8% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 14.8% over the last twelve months, against a 5-year average of 13.1% a year.

Growing faster than the industry

Revenue grew 16.6% over the last twelve months; the Special Industry Machinery, except Metalworking median is 5.7%.

Guidance raised

Kadant raised its 2026 revenue outlook on Aug 4, 2026.

Gross margin slipping

Gross margin was 44.4% over the last twelve months, against 45.1% a year earlier.

Return on equity under 15%

Return on equity was 11.7% over the last twelve months and averaged 15.4% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 10.8%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Kadant's return on equity of 11.7% is above the Special Industry Machinery, except Metalworking median of 4.6%.

Earnings grew over 5 years

Net income grew 13.1% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 9.8% over the last twelve months, against a 5-year average of 11.3%.

Net margin above the industry

Kadant's net margin of 9.8% is above the Special Industry Machinery, except Metalworking median of 5.1%.

High debt

Debt is 43.3% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 47.1% five years ago to 43.3%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 43.7% of total debt.

Interest well covered

Operating income covers interest expense 8.9 times.

Short-term assets cover short-term debts

Current assets are 2.49 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.60; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Kadant paid dividends worth 0.5% of the share price over the last twelve months.

Yield below Treasuries

The 0.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Kadant yields 0.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 14.1% of net income.

Covered by free cash flow

Dividends take 9.5% of free cash flow.