Financial Contrast: Kennametal (NYSE:KMT) and Wabash National (NYSE:WNC)

Kennametal (NYSE:KMT) and Wabash National (NYSE:WNC) are both industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, dividends, risk, profitability, institutional ownership and earnings.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Kennametal and Wabash National, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kennametal	4	4	0	1	1.78
Wabash National	1	1	2	0	2.25

Kennametal currently has a consensus price target of $34.07, suggesting a potential upside of 13.53%. Wabash National has a consensus price target of $21.67, suggesting a potential upside of 87.88%. Given Wabash National’s stronger consensus rating and higher possible upside, analysts plainly believe Wabash National is more favorable than Kennametal.

Dividends

Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 2.7%. Wabash National pays an annual dividend of $0.32 per share and has a dividend yield of 2.8%. Kennametal pays out 18.2% of its earnings in the form of a dividend. Wabash National pays out -16.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Wabash National is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Kennametal and Wabash National”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kennametal	$2.36 billion	0.97	$342.39 million	$4.40	6.82
Wabash National	$1.42 billion	0.33	$211.45 million	($1.93)	-5.98

Kennametal has higher revenue and earnings than Wabash National. Wabash National is trading at a lower price-to-earnings ratio than Kennametal, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kennametal and Wabash National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kennametal	14.53%	24.83%	12.84%
Wabash National	-5.48%	-36.59%	-10.27%

Risk & Volatility

Kennametal has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500. Comparatively, Wabash National has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500.

Institutional & Insider Ownership

97.1% of Wabash National shares are held by institutional investors. 1.7% of Kennametal shares are held by company insiders. Comparatively, 2.8% of Wabash National shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Kennametal beats Wabash National on 9 of the 17 factors compared between the two stocks.

About Kennametal

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. The company operates through two segments, Metal Cutting and Infrastructure. It offers standard and custom products, including turning, milling, hole making, tooling systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. In addition, the company provides specified product design, selection, application, and support services; and standard and custom metal cutting solutions to aerospace, general engineering, energy, and transportation customers. Further, it produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; and ceramics used by the packaging industry for metallization of films and papers. The company provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force; a network of independent and national distributors; integrated supplier channels; and through the Internet. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.

About Wabash National

Wabash National Corporation provides connected solutions for the transportation, logistics, and distribution industries primarily in the United States. The company operates through two segments, Transportation Solutions and Parts & Services. The Transportation Solutions segment designs and manufactures transportation-related equipment and products dry and refrigerated van trailers, platform trailers, tank trailers, and truck-mounted tanks; truck bodies for dry-freight transportation; cargo and cargo XL bodies for commercial applications; refrigerated truck bodies; platform truck bodies; and used trailers, as well as laminated hardwood oak flooring products. The Parts & Services segment provides aftermarket parts and services; steel flatbed bodies, truck body mounting, shelving for package delivery, partitions, roof racks, hitches, liftgates, thermal solutions, and others; truck body repair parts; and door repair and replacement, collision repair, and basic maintenance services. It also develops and scales a digital marketplace for the transportation and logistics distribution industry; operates a parts and services distribution platform; and stainless steel storage tanks and silos, mixers, and processors for the dairy, food and beverage, pharmaceutical, chemical, craft brewing, and biotech markets; trailers as a service; and composite products, including truck bodies, overhead doors, and other industrial application products, as well as used trailers. The company offers its products under the Wabash, DuraPlate, DuraPlateHD, DuraPlate AeroSkirt, and AeroSkirt CX brands, as well as EcoNex brand. It serves its products to truckload common carriers, leasing companies, private fleet carriers, less-than-truckload common carriers, and package carriers. Wabash National Corporation was founded in 1985 and is headquartered in Lafayette, Indiana.