Head-To-Head Review: Kennametal (NYSE:KMT) & Amada (OTCMKTS:AMDLY)

Amada (OTCMKTS:AMDLY) and Kennametal (NYSE:KMT) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Earnings and Valuation

This table compares Amada and Kennametal”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amada	$2.60 billion	1.45	$213.75 million	$2.33	19.74
Kennametal	$1.97 billion	0.81	$93.12 million	$1.20	17.53

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

Dividends

Amada pays an annual dividend of $1.22 per share and has a dividend yield of 2.7%. Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 3.8%. Amada pays out 52.4% of its earnings in the form of a dividend. Kennametal pays out 66.7% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Amada	7.29%	5.45%	4.39%
Kennametal	4.73%	8.09%	4.19%

Risk and Volatility

Amada has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500. Comparatively, Kennametal has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Amada and Kennametal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amada	0	0	0	0	0.00
Kennametal	3	5	0	0	1.63

Kennametal has a consensus price target of $24.00, indicating a potential upside of 14.10%. Given Kennametal’s stronger consensus rating and higher possible upside, analysts clearly believe Kennametal is more favorable than Amada.

Summary

Amada beats Kennametal on 8 of the 13 factors compared between the two stocks.

About Amada

Amada Co., Ltd., together with its subsidiaries, manufactures, sells, leases, repairs, maintains, checks, and inspects metalworking machinery, software, and peripheral equipment in Japan, North America, Europe, Asia, and internationally. It offers sheet metal fabrication machines, including laser machines, punch and laser combination machines, turret punch presses, press brakes, bending robots, and welders, as well as software solutions; general fabrication machines, such as shearing and deburring machines, corner shear, iron worker, AMS SPACE series, horizontal benders, tapping and fastener insertion machines, and environment related products; cutting fluids, lubricants, and other consumables; and a range of tools for bending and punching. The company also provides metal cutting machines, such as hyper saw, pulse cutting band saw, automatic and semi-automatic general-purpose band saw, vertical band saw, circular saw, and other machines; structural steel machines; grinding machines; and band saw blades and circular saw blades that are used for metal cutting machines. In addition, it offers precision welding machines, including laser welders and markers, resistance welders, and systems for use in automobile parts, electronic components, and medical instruments. Further, the company provides consumables, and tooling equipment. Additionally, it offers stamping presses and stamping press equipment, and spring machines. The company was formerly known as Amada Holdings Co., Ltd. Amada Co., Ltd. was founded in 1946 and is headquartered in Isehara, Japan.

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.