Critical Analysis: Kadant (KAI) versus Its Rivals

Kadant (NYSE:KAI) is one of 436 public companies in the “Machinery” industry, but how does it weigh in compared to its competitors? We will compare Kadant to similar businesses based on the strength of its earnings, risk, analyst recommendations, dividends, institutional ownership, profitability and valuation.

Earnings and Valuation

This table compares Kadant and its competitors revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Kadant	$1.05 billion	$101.97 million	29.66
Kadant Competitors	$4.61 billion	$364.05 million	5.04

Kadant’s competitors have higher revenue and earnings than Kadant. Kadant is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Kadant and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kadant	9.52%	13.16%	7.67%
Kadant Competitors	-1,044.43%	-15.08%	0.57%

Dividends

Kadant pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. Kadant pays out 14.5% of its earnings in the form of a dividend. As a group, “Machinery” companies pay a dividend yield of 2.8% and pay out 24.6% of their earnings in the form of a dividend. Kadant has raised its dividend for 12 consecutive years.

Insider & Institutional Ownership

96.1% of Kadant shares are owned by institutional investors. Comparatively, 51.8% of shares of all “Machinery” companies are owned by institutional investors. 1.3% of Kadant shares are owned by insiders. Comparatively, 14.2% of shares of all “Machinery” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Kadant and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kadant	0	3	1	0	2.25
Kadant Competitors	4206	14707	18216	808	2.41

Kadant presently has a consensus target price of $357.50, suggesting a potential upside of 21.61%. As a group, “Machinery” companies have a potential upside of 35.46%. Given Kadant’s competitors stronger consensus rating and higher possible upside, analysts clearly believe Kadant has less favorable growth aspects than its competitors.

Risk and Volatility

Kadant has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Kadant’s competitors have a beta of 5.12, indicating that their average stock price is 412% more volatile than the S&P 500.

Summary

Kadant competitors beat Kadant on 9 of the 15 factors compared.

Kadant Company Profile

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.