Kadant Inc. (KAI) | Investment Case

1. Company Snapshot

1.a. Company Description

Kadant Inc.supplies technologies and engineered systems worldwide.It operates through 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, shower and fabric-conditioning systems, formation systems, and water-filtration systems.The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, logging machinery, industrial automation and control systems, 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 balers and related equipment; and manufactures and sells biodegradable absorbent granules for carriers in as carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption.

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.

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1.b. Last Insights on KAI

Breaking News: Kadant Inc reported Q4 earnings of $2.27 per share, surpassing the Zacks Consensus Estimate of $2.19 per share. This compares to earnings of $2.25 per share in the same quarter last year. The company recently held its Q4 2025 Earnings Call. No analyst recommendations are available. Some analysts have given recommendations in the past, Robert Baird & Co. gave a outperform rating and Stifel gave a buy rating .

1.c. Company Highlights

Last Price	327.52
Change Percentage	-3.65%
Open	335.56
Previous Close	339.91
Market Cap ( Millions)	3858
Volume	180043
Year High	387.53
Year Low	244.87
M A 50	312.44
M A 200	309.96

FCF Yield	3.78%
Dividend Yield	0.42%
ROE	11.26%
Debt / Equity	43.06%
Net Debt / EBIDTA	112.37%
Price To Book	4.44
Price Earnings Ratio	37.83
Price To FCF	26.44
Price To sales	3.67
EV / EBITDA	18.34

2. Kadant's Q4 2025 Earnings: A Strong Close to a Record Year

Kadant's fourth-quarter 2025 financial performance was marked by a record revenue of $286.2 million, an 11% increase compared to the same period last year, driven by contributions from recent acquisitions and a record aftermarket parts business. Adjusted EBITDA was up 11% to $58 million, and adjusted EBITDA margin was 20.3%. Adjusted EPS increased 2% to $2.27, beating analysts' estimates of $2.19. For the full year, revenue was $1.052 billion, up 3% from 2024, and adjusted EPS decreased 10% to $9.26.

Publication Date: Feb -20

                                    📋 Highlights
                                    Q4 Revenue Growth::
                                                Record $286 million revenue, up 11% YoY driven by acquisitions and a record aftermarket parts business.
Full-Year Revenue::
                                                $1.05 billion in fiscal 2025, with 3% growth YoY despite macroeconomic challenges.
Adjusted EBITDA Margin::
                                                20.3% in Q4 2025, up 11% YoY, reflecting improved operational efficiency.
2026 Guidance::
                                                Revenue of $1.16–$1.185 billion, adjusted EPS of $12.53–$12.88 (up from prior guidance) excluding amortization adjustments.
Backlog & Capital Orders::
                                                $288 million backlog (60% capital), with capital equipment orders expected to stabilize at $290–$300 million in 2026.

                                

Segment Performance and Outlook

The company's consumables business saw increased demand, with Flow Control at 73% of revenues, Industrial at 76%, and Material Handling at 53%. The backlog currently stands at $288 million, with 60% capital and 40% parts. Kadant is cautious with its guidance for 2026 due to uncertainty caused by tariffs and geopolitical volatility, expecting flat to 3% organic growth. The aftermarket business has outperformed expectations, and the company is seeing a focus on parts and services from European peers.

Valuation and Growth Prospects

With a P/E Ratio of 37.78 and an EV/EBITDA of 17.81, Kadant's valuation suggests a premium for its growth prospects. The company's adjusted EPS guidance for 2026 is $10.40 to $10.75, and when adjusted for intangible amortization expense, the range becomes $12.53 to $12.88. Analysts estimate next year's revenue growth at 12.1%. Kadant's ROIC is 7.39%, and ROE is 11.26%, indicating a decent return on capital and equity. The Net Debt/EBITDA ratio is -0.59, highlighting the company's net cash position.

Operational Highlights and Strategic Focus

Kadant's management highlighted the booming data center construction market, which is driving demand for materials such as aggregate, sand, and concrete. The company's material handling group is well-positioned to benefit from this trend. Additionally, the OSB segment within Industrial Process continues to grow, finding new applications and uses for the product. Kadant's focus on creating value for its clients by understanding their operations and helping them increase throughputs and reduce inputs remains a key strategic focus.

3. NewsRoom

Kadant (NYSE:KAI) Stock Price Up 6.7% – Here’s Why

Feb -22

Source: defenseworld.net

Kadant Inc. (KAI) Q4 2025 Earnings Call Transcript

Feb -19

Source: seekingalpha.com

Kadant (KAI) Surpasses Q4 Earnings and Revenue Estimates

Feb -19

Source: zacks.com

Kadant Reports Fourth Quarter and Fiscal Year 2025 Results

Feb -18

Source: globenewswire.com

Kadant to Hold Earnings Conference Call on Thursday, February 19, 2026

Feb -13

Source: globenewswire.com

Are Investors Missing Out On Kadant's (KAI) Dividend

Feb -13

Source: 247wallst.com

Kadant Named One of America's Most Responsible Companies for Sixth Consecutive Year

Feb -12

Source: globenewswire.com

Kadant (NYSE:KAI) and BrewBilt Manufacturing (OTCMKTS:BBRW) Critical Contrast

Feb -07

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.79%)

6. Segments

Flow Control

Expected Growth: 6.5%

Kadant Inc.'s Flow Control segment growth of 6.5% is driven by increasing demand for efficient fluid handling systems in the pulp and paper industry, coupled with the company's strategic expansion into emerging markets and innovative product offerings. Additionally, growing adoption of automation and digitalization in manufacturing processes is fueling demand for Kadant's flow control solutions.

Industrial Processing

Expected Growth: 6.8%

Kadant Inc.'s Industrial Processing segment growth of 6.8% is driven by increasing demand for sustainable and efficient processing solutions, expansion in emerging markets, and strategic acquisitions. Additionally, growing adoption of automation and digitalization in industries such as pulp and paper, and food processing, is also contributing to the segment's growth.

Material Handling

Expected Growth: 7.2%

Kadant's Material Handling segment growth of 7.2% is driven by increasing demand for automation and efficiency in manufacturing processes, particularly in the packaging and e-commerce industries. Additionally, the segment benefits from the company's strategic acquisitions and investments in product development, enhancing its offerings and expanding its customer base.

7. Detailed Products

Stock Preparation Systems

Kadant's stock preparation systems are designed to optimize the pulping and screening process, providing high-quality pulp for paper, tissue, and packaging applications.

Doctoring, Creping, and Filtration Systems

Kadant's doctoring, creping, and filtration systems are designed to improve paper machine efficiency, reduce waste, and enhance product quality.

Rolling Machine Systems

Kadant's rolling machine systems are designed to improve the winding and unwinding process, reducing waste and improving product quality.

Aerospace and Industrial Products

Kadant's aerospace and industrial products are designed to provide high-performance solutions for demanding applications.

Water Management Systems

Kadant's water management systems are designed to optimize water usage, reduce waste, and improve environmental sustainability.

8. Kadant Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Kadant Inc. operates in a niche market, and the threat of substitutes is moderate. While there are some alternative products available, they are not as effective or efficient as Kadant's products.

Bargaining Power Of Customers

Kadant Inc.'s customers are largely dependent on the company's products, and the bargaining power of customers is low. The company has a strong reputation and a wide range of products, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Kadant Inc. has a diverse supplier base, and the bargaining power of suppliers is moderate. While some suppliers may have some negotiating power, the company's size and reputation help to mitigate this risk.

Threat Of New Entrants

The threat of new entrants in Kadant Inc.'s market is low. The company has a strong brand and a significant market share, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The intensity of rivalry in Kadant Inc.'s market is high. The company operates in a competitive industry, and there are several established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	12.99%
Debt Cost	8.57%
Equity Weight	87.01%
Equity Cost	10.46%
WACC	10.21%
Leverage	14.92%

11. Quality Control: Kadant Inc. passed 8 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Graco

A-Score: 5.4/10

Value: 2.1

Growth: 5.2

Quality: 8.5

Yield: 2.0

Momentum: 4.5

Volatility: 10.0

1-Year Total Return ->

Franklin Electric Co

A-Score: 5.3/10

Value: 3.3

Growth: 6.8

Quality: 6.6

Yield: 2.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

Flowserve

A-Score: 5.1/10

Value: 4.4

Growth: 4.6

Quality: 6.7

Yield: 3.0

Momentum: 7.5

Volatility: 4.7

1-Year Total Return ->

Nordson

A-Score: 5.1/10

Value: 2.5

Growth: 5.8

Quality: 7.1

Yield: 2.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

IDEX

A-Score: 4.7/10

Value: 2.9

Growth: 4.9

Quality: 7.0

Yield: 3.0

Momentum: 2.0

Volatility: 8.3

1-Year Total Return ->

Kadant

A-Score: 4.0/10

Value: 2.7

Growth: 6.4

Quality: 7.0

Yield: 0.0

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

13.38%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.21%

Kadant Inc. - US48282T1043

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on KAI

1.c. Company Highlights

Expensive

Higher Growth

Better Quality

Earnings Beats

Revenues Miss

Revenues Beats

Strong Momentum

Average Growth

Stable Momentum

Average Yield

Average Quality

2. Kadant's Q4 2025 Earnings: A Strong Close to a Record Year

Segment Performance and Outlook

Valuation and Growth Prospects

Operational Highlights and Strategic Focus

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.79%)

6. Segments

Flow Control

Expected Growth: 6.5%

Industrial Processing

Expected Growth: 6.8%

Material Handling

Expected Growth: 7.2%

7. Detailed Products

Stock Preparation Systems

Doctoring, Creping, and Filtration Systems

Rolling Machine Systems

Aerospace and Industrial Products

Water Management Systems

8. Kadant Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Kadant Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

327.52$

Current Price

327.52$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA