Kadant Inc. (KAI) shares peaked at $430 in 2024 before falling back to current levels. This provides an opportunity now to invest at a reasonable valuation and capture returns that are likely to come from the engineered systems company’s expected future growth, writes Doug Gerlach, editor of SmallCap Informer.
Kadant was incorporated in 1991 as Thermo Fibertek Inc., operating as a majority-owned subsidiary of Thermo Electron Corp. focused on technologies for the pulp and paper industry. In July 2001, Thermo Electron spun out the business to public shareholders, at which time the company changed its name to Kadant.
It has evolved through disciplined internal research and targeted acquisitions into a global leader supplying high-value, critical components and engineered systems that drive Sustainable Industrial Processing. The company employs approximately 4,000 people across 22 countries worldwide.
Kadant Inc. (KAI)
Operational execution accelerated in the second quarter of fiscal 2026. Kadant reported record Q2 revenues of $312.9 million, representing a 22.6% increase over the $255.3 million generated in Q2 2025. Organic revenues grew 8%, while acquisitions contributed 13 percentage points of growth and foreign currency translation added two percentage points.
EPS for the quarter rose 23.9% to $2.75, up from $2.22 in Q2 2025. Record adjusted EPS reached $3.42, up 26% year-over-year, while adjusted EBITDA jumped 30% to a record $68.1 million. Bookings for Q2 2026 grew 16% to $312.1 million, leaving a robust order backlog of $340.0 million.
At the recent price of $261.54, the stock resides firmly in the upper half of the Buy Zone with a reward-to-risk ratio of 5.7 to 1, comfortably outpacing our 3 to 1 minimum threshold. With dividends, projected total annual return is targeted at 19.5%.
Recommended Action: Buy KAI.