KADANT INC (KAI): what the price assumes

In the published model solve dated 2026-Q2, anchored at $302.24, KADANT INC (KAI) is priced for +23.3% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/KAI

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.6% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Kadant builds industrial process equipment and, more importantly, the parts and consumables that keep that equipment running, a razor-and-blade model where the recurring aftermarket revenue grew 11% in 2025 even as the lumpier capital-equipment side swung with customer spending.
• The defining risk is the cyclicality of those capital projects, which the company says "tend to be variable and hard to predict", paired with a balance sheet now carrying acquisition-related debt after the recent Kadant Profil deal.
• Watch the backlog and bookings, which hit a record $320.8 million in the first quarter, against full-year EPS guidance that management lowered for purchase-accounting dilution even as it raised revenue guidance.

Bull Case

The moat is the installed base, and the margins prove it. Kadant sells highly engineered equipment into industrial processing, and once that equipment is running in a customer's plant, the company sells the parts and consumables that keep it running for years. That aftermarket stream is the durable, high-margin core: the 10-K reports demand for parts and consumables "remained strong, with an 11% increase in 2025", growth that does not depend on customers approving new capital budgets. A trailing operating margin near 14.8% and interest coverage of ten times reflect a business where the recurring revenue carries the fixed costs and the capital orders are upside on top.

The capital side also has a structural defense against losing a sale once it is signed. The 10-K explains that large capital projects are "highly customized for the customer and, as a result, would include a significant cost to rework in the event of cancellation", which means orders in backlog are sticky and the customer is locked into Kadant's engineering rather than free to switch mid-project. That customization is the second layer of the moat: not just the installed base pulling aftermarket demand, but each new project deepening the switching cost for the equipment that follows.

The current cycle is turning Kadant's way. First-quarter revenue rose 17.7% to $281.5 million, and bookings hit a record $320.8 million, up 25.2%, lifting backlog to $326 million, with organic bookings up 23%. Adjusted EPS of $2.84 beat the $2.14 estimate by a wide margin, and adjusted EBITDA margin reached 20.2%. Management raised full-year revenue guidance to $1.178 to $1.203 billion. A company with a record book of business, a recurring aftermarket base growing through any cycle, and the engineering lock-in to defend its capital orders is the kind of compounder the static valuation methods struggle to credit.

Bear Case

The balance sheet has changed shape, and that is the place to start. Kadant carries net debt of about $261 million, roughly 1.6 times trailing operating income, after funding the €157 million Kadant Profil acquisition. Interest coverage of ten times is still healthy, but the company has moved from a near-net-cash posture to one where it is integrating an acquisition and servicing more debt at the same time. The immediate cost is visible: management lowered its full-year EPS guidance even while raising revenue guidance, because the Profil deal is dilutive to adjusted EPS by $0.20 in 2026 as purchase accounting defers income. Acquisitions are how Kadant grows, but each one adds integration risk and leverage, and the market is paying a premium that assumes those deals keep compounding value rather than diluting it.

The deeper fragility is the capital-equipment cycle the company cannot control. Kadant tells investors plainly that its "bookings and revenues for capital projects tend to be variable and hard to predict" and that it is "especially difficult to accurately forecast our operating results during periods of economic uncertainty" when customers curtail capital and operating spending. The record first-quarter bookings are the cycle near a peak; the same line item can fall sharply when industrial customers pause expansion. The aftermarket base cushions a downturn, but it does not eliminate the swing, and a stock priced for durable compounding is most exposed at exactly the moment the capital cycle rolls over.

That exposure is sharpened by what the price asks. At roughly 25 times company-wide operating income, only the growth-DCF method reaches the price; the asset-value, earnings-power, and peer-multiple methods all read it as richly valued, with the asset lens at three times what book-and-profitability frames justify and the zero-growth earnings lens at well under half the price. That pattern means the entire premium rests on Kadant sustaining above-average compounding for years. Pay it near a bookings peak, with fresh acquisition debt and a guidance cut already in hand, and the bet is that the cycle and the integration both cooperate.

Valuation

The price is a durability bet, and the methods say so cleanly. At about 25 times company-wide operating income, only the forward-growth method reaches the price; the asset-value, earnings-power, and peer-multiple families all land below it. That is the signature of a moat-and-compounding premium: the static methods, which value the business on today's earnings or book value, structurally cannot price the recurring aftermarket annuity and the engineering lock-in that let Kadant grow steadily, so the price looks rich on every frame except the one that credits future growth. The trailing operating margin near 14.8% is the base; the premium is the market paying for that base to expand through continued aftermarket growth and bolt-on acquisitions.

The spread between the methods is the information. The asset-value lens reads the price at roughly three times what book-and-profitability methods justify, and the zero-growth earnings lens lands well under half the price. A reader should take from that pattern not that the stock is mispriced, but that the price is entirely a wager on durable compounding, the kind of bet that pays off for genuinely advantaged industrials and punishes hard when the compounding stalls. The implied runway is roughly six years of sustained above-average growth, which is demanding for a business with a cyclical capital-equipment leg.

Solvency is sound but no longer pristine. Net debt around $261 million at 1.6 times operating income with ten-times interest coverage is comfortable, but the recent acquisition has added leverage and near-term EPS dilution, so the balance sheet now carries integration risk alongside the cycle risk. The genuine question the price raises is durability: whether the aftermarket base and the acquisition pipeline can keep compounding through the next capital-spending downturn at a pace that earns a multiple this far above the static methods.

Catalysts

The first quarter was a record on the order side. Kadant posted revenue of $281.5 million, up 17.7%, and bookings of $320.8 million, up 25.2%, a record that lifted backlog to $326 million, with organic bookings up 23% on strong aftermarket parts demand and improving capital-project activity. Adjusted EPS of $2.84 beat the $2.14 consensus by roughly a third, and adjusted EBITDA margin reached 20.2%.

The forward picture carries one important wrinkle. Management raised full-year revenue guidance to $1.178 to $1.203 billion but lowered its GAAP and adjusted EPS ranges, citing short-term dilution from the recently completed €157 million Kadant Profil acquisition, which it expects to reduce 2026 adjusted EPS by $0.20 as purchase accounting defers income. For the second quarter Kadant guided revenue of $296 to $306 million and adjusted EPS of $2.88 to $2.98. The signals to track are whether the record backlog converts to revenue on schedule, whether the Profil integration moves from dilutive to accretive, and whether bookings hold as industrial customers set capital budgets for the back half of the year.

Peer Cohorts (Per Segment, With Filing Citations)

Flow Control (reported)

• ROK (Rockwell Automation, Inc.)
• FY2025 10-K: …controls as the asset is created or enhanced, or (iii) our performance does not create an asset for which we have an alternative use and we have an enforceable right to payment for performance completed to date. If one or more of these criteria are met, then we recognize revenue over time using a method that depicts…
• FY2025 10-K: …price for the period between transfer of products or performance of services and customer payment if expected to be one year or less. For most of our products, we invoice at the time of shipment and we do not typically have significant contract balances. For our solutions and services as well as some of our products,…
• PH (PARKER-HANNIFIN CORPORATION)
• FY2025 10-K: …increases • Investing in organic growth and productivity • Strategic acquisitions that strengthen our portfolio • Share repurchases, including repurchases under the 10b5-1 share repurchase program Cash Flows A summary of cash flows follows: (dollars in millions) 2025 2024 Cash provided by (used in): Operating…
• FY2025 10-K: We offer hundreds of thousands of individual part numbers, and no single product contributed more than one percent to our total net sales for the year ended June 30, 2025. Listed below are some of our principal products. Diversified Industrial Segment . Our Diversified Industrial Segment products consist of a broad…
• FLS (FLOWSERVE CORP)
• FY2025 10-K: …this Annual Report. Business Functions Our business segments share a focus on industrial flow control technology and have a number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage. Our…
• FY2025 10-K: …short-term and long-term initiatives and accelerates growth through three key areas: diversification, decarbonization, and digitization (the "3D Strategy"). The goal of our 3D Strategy is to utilize our leadership in the flow control industry, and through our commitment to research and development ("R&D"), create…
• XYL (Xylem Inc.)
• FY2025 10-K: …with product offerings in the filtration and separation, disinfection, and wastewater solutions, for municipal and industrial applications. In the Water Infrastructure segment we reach customers indirectly, through channel partners and distributors, directly and through our service capabilities. • Applied Water…
• FY2025 10-K: …Our ability to deliver innovative product offerings has enabled us to compete effectively, cultivate and maintain customer relationships and serve and expand into many niche and new markets. 8 Measurement and Control Solutions Measurement and Control Solutions develops advanced technology solutions that enable…
• IEX (IDEX CORP)
• FY2025 10-K: …process. The CODM considers Adjusted EBITDA budget and forecast-to-actual variances when making decisions about the allocation of operating and capital resources to each segment. Adjusted EBITDA is also used in determining the compensation of certain employees. 68 Table of Contents The HST segment designs, produces…
• FY2025 10-K: …agriculture and semiconductor businesses, partially offset by higher volume in the municipal water businesses, which together more than offset the benefit of positive price across the segment. • Adjusted EBITDA margin increased primarily due to positive price/cost as well as net productivity improvements. These…
• EMR (EMERSON ELECTRIC CO.)
• FY2025 10-K: …Discussion and Analysis of Financial Condition and Results of Operations." INTELLIGENT DEVICES Final Control The Final Control segment is a leading global provider of control valves, isolation valves, shutoff valves, pressure relief valves, pressure safety valves, actuators, and regulators for process and hybrid…
• FY2025 10-K: …and now reports to Control Systems & Software leadership. AspenTech's results, which were previously reported as a separate segment, are now consolidated into the Control Systems & Software segment for all periods presented. Prior year amounts have been reclassified to conform to the current year presentation. In 202…
• AME (AMETEK, Inc.)
• FY2025 10-K: …are assessed are probable. Variable lease payments are presented as operating expense in the Company's income statement in the same line item as expense arising from fixed lease payments. Cash used in operations for operating leases is not materially different than total lease costs. Revenue Recognition Revenue is…
• FY2025 10-K: 4 million shares at a cost of $ 2,114.0 million at December 31, 2024. The number of shares outstanding at December 31, 2025 was 229.0 million shares, compared with 230.7 million shares at December 31, 2024. Subsequent Event Effective February 12, 2026, the Company's Board of Directors approved a 10 % increase in the…
• DOV (DOVER Corp)
• FY2025 10-K: Pumps & Process Solutions segment earnings for the year ended December 31, 2025 increased $115.0 million, or 21.4%, compared to the prior year. The increase was primarily driven by higher volumes, productivity initiatives, favorable portfolio mix and the impact from acquisitions. Segment margin increased to 30.3% from…
• FY2025 10-K: …and trade volumes; an increased global focus on digitization and automation in industrial processes; increasing requirements for sustainability, safety, energy efficiency and consumer product safety; and growth of the middle class and consumption in emerging economies. • Our Engineered Products segment is…

Industrial Processing (reported)

• NDSN (NORDSON CORPORATION)
• FY2025 10-K: …drug infusion, IV & drug delivery, patient care, surgical and biopharma. • Surgical Solutions - Microplegia myocardial protection devices and related consumables used in cardiac surgical procedures. Advanced Technology Solutions This segment integrates our proprietary product technologies into the progressive stages…
• FY2025 10-K: …stages of an electronics customer's production and measurement and control processes, such as surface treatment, precisely controlled dispensing of material and test and inspection to ensure quality and reliability. Applications include, but are not limited to, semiconductors, printed circuit boards, electronic…
• DOV (DOVER Corp)
• FY2025 10-K: …revenue for the year ended December 31, 2025 increased $36.3 million, or 3.2% compared to the prior year, comprised of organic growth of 1.9%, a favorable impact from foreign currency translation of 1.2% and acquisition-related growth of 0.1%. Customer pricing favorably impacted revenue in 2025 by approximately 3.1%.…
• FY2025 10-K: …and remote monitoring of clean and traditional fuels, cryogenic gases and other hazardous substances, as well as safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments across the globe. Among solutions supplied by the segment are dispensing equipment and components for…
• IEX (IDEX CORP)
• FY2025 10-K: …process. The CODM considers Adjusted EBITDA budget and forecast-to-actual variances when making decisions about the allocation of operating and capital resources to each segment. Adjusted EBITDA is also used in determining the compensation of certain employees. 68 Table of Contents The HST segment designs, produces…
• FY2025 10-K: …results, they may also have the effect of heightening many of the other risks described in this Item 1A , "Risk Factors" of this annual report, such as those relating to international operations, the Company's ability to develop new products, the Company's ability to execute on its growth strategy of acquisitions,…
• MIDD (THE MIDDLEBY CORPORATION)
• FY2025 10-K: …Customers include some of the largest international food processing companies. A large portion of the company's revenues have been generated from producers of protein products such as bacon, salami and dry cure, sausage and hot dogs, egg bites, poultry, alternative protein, case ready, lunch meat and pet food, and…
• FY2025 10-K: …restaurant chains. The commercial foodservice equipment industry growth opportunities in the United States are driven by the development of new quick-service and casual-theme restaurant chain concepts, the expansion of foodservice into nontraditional locations such as convenience stores and retail outlets, as well as…
• GGG (GRACO INC.)
• FY2025 10-K: …then supply to their customers. Industrial The Industrial division designs and manufactures liquid finishing and advanced fluid dispensing equipment; pumps to move chemicals, petroleum, food, and other fluids; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators.…
• FY2025 10-K: Industrial Segment The Industrial segment represented approximately 45 percent of our total sales in 2025. It includes the Industrial and Powder divisions. The Industrial segment markets equipment and solutions for moving and applying paints, powder coatings, sealants, adhesives and other fluids. Markets served…

Material Handling (reported)

• CECO (CECO ENVIRONMENTAL CORP.)
• FY2025 10-K: …and recycling, and wind and solar power components manufacturing end markets. We assist our customers in maintaining clean and safe operations for employees, reducing energy consumption, minimizing waste for customers, and meeting regulatory standards for toxic emissions, fumes, volatile organic compounds, and odor…
• FY2025 10-K: …aviation fuel, fertilizers, lubricants, polymers, plastics, paints and coatings, and additives that keep industry and our economies operating. In response to increasing global demand for petrochemicals and refined products, companies are producing a wider range of intermediate and final products from new sources,…
• MWA (MUELLER WATER PRODUCTS, INC.)
• FY2025 10-K: …countries in response to additional tariffs, we may be required to raise our prices or incur additional expenses, which may result in the loss of customers and harm our operating performance, sales and earnings. The prices of our purchased components and raw materials can be volatile. Our operations require…
• FY2025 10-K: …or industrial applications. 2 Table of Contents Index to Financial Statements Water Management Solutions Water Management Solutions' portfolio includes fire hydrants, repair and installation, natural gas, metering, leak detection and pressure management and control products and solutions. We recognized $ 604.8…
• GTLS (CHART INDUSTRIES, INC.)
• FY2025 10-K: , none of which are individually material. Of these facilities, approximately 8.9 million square feet are owned, and approximately 4.0 million square feet are occupied under operating leases. Because Chart is global in nature, with substantial inter-segment cooperation, properties are often used by multiple business…
• FY2025 10-K: …the storage, distribution, vaporization, and application of industrial gases and certain hydrocarbons. Our Heat Transfer Systems segment supplies mission critical engineered equipment and systems used in the recovery, separation, liquefaction, and purification of hydrocarbons, LNG and industrial gases that span…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.