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Value

Specialty chemical companies are bullish about 2011 as global demand continues to recover. Cabot Corporation (CBT - Snapshot Report) is growing its emerging markets business to tap into that demand. Cabot is a value stock, trading with a forward P/E of 14.

Cabot Corporation manufactures performance materials including rubber and specialty grade carbon blacks, inkjet colorants, fumed metal oxides, and cesium formate drilling fluids.

The company is truly global, operating 39 manufacturing facilities in 19 countries.

Cabot Beat By 73% in the Fiscal First Quarter

On Jan 25, Cabot reported its fiscal first quarter 2011 results and surprised on the Zacks Consensus Estimate by 49 cents. Earnings per share were $1.16 compared to the consensus at 67 cents. The company made just 65 cents in the year ago quarter.

Net sales rose 11% to $753 million from $679 million last year boosted by all business segments as the global economy improved.

Cabot saw robust end market growth in China and Southeast Asia. The market for tantalum products was also very strong.

Global volumes, however, while modestly higher year over year, were still below peak levels.

Zacks Consensus Estimates Rise

Given the beat and the bullish outlook from Cabot, it's not surprising that the Zacks Consensus Estimates for both fiscal 2011 and fiscal 2012 have risen.

The fiscal 2011 Zacks Consensus Estimate has moved higher by 3 cents to $3.13 per share in the last 7 days as 2 estimates were revised higher. This is earnings growth of just 3%.

But fiscal 2012 is expected to see 8% earnings growth on earnings of $3.39 per share, up from $3.21 just 30 days ago.

Cabot Has Value Characteristics

In addition to its low P/E ratio, Cabot also has a very attractive price-to-book ratio of just 1.9, well under the value parameter of 3.0.

It also has a value price-to-sales ratio of 0.9.

Cabot also has other solid fundamentals including a return on equity (ROE) of 16.9%. It pays a dividend currently yielding 1.6%.

Cabot is a Zacks #1 Rank (strong buy) stock.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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