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Why Is Cabot (CBT) Up 2.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Cabot (CBT - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cabot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Cabot’s Q3 Earnings & Revenues Miss Estimates, Fall Y/Y
Cabot recorded third-quarter fiscal 2023 (ending Jun 30, 2023) earnings of $1.43 per share, down from the year-ago quarter's $1.69.
CBT posted adjusted earnings of $1.42 per share, down from the year-ago quarter's figure of $1.73. Adjusted earnings lagged the Zacks Consensus Estimate of $1.56.
The company’s net sales in the third quarter were $968 million, which missed the Zacks Consensus Estimate of $1,145.3 million. Net sales decreased around 15.8% from the prior-year quarter.
Segment Highlights
Reinforcement Materials’ sales decreased around 14.5% year over year to $624 million in the reported quarter. It lagged our estimate of $683.2 million. Earnings before interest and tax (EBIT) in the segment were $132 million, up around 17% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing and better product mix in calendar-year 2023 customer agreements, which were partly offset by lower volumes.
In the reported quarter, sales in the Performance Chemicals division declined 18% year over year to $307 million, falling short of our projection of $443.2 million. EBIT also witnessed a substantial drop of approximately 49% to $32 million, primarily attributed to reduced volumes and an unfavorable product mix, largely stemming from challenges in key end markets. The most significant volume contraction was observed in the fumed metal oxides product line.
Financials
Cabot had cash and cash equivalents of $220 million at the end of the quarter, down around 5.7% year over year. The company’s long-term debt was $1,093 million.
Capital expenditures in the reported quarter were $80 million.
Cash flow from operating activities was $243 million in the quarter.
Cabot paid $23 million of dividends and repurchased shares worth $15 million in the reported quarter.
Outlook
The company expects steady sequential volumes and strong EBIT growth year over year in Reinforcement Materials due to pricing and mix benefits in customer agreements. For Performance Chemicals, it expects stable sequential volumes in major product lines, with moderate growth in battery materials and inkjet. Pricing pressure in China's EV value chain is expected to affect battery materials in the short term. Cabot expects EBITDA results for fiscal 2023 to be lower than its earlier communicated guidance. Fiscal fourth-quarter adjusted EPS is projected to be in the range of $1.40 to $1.55, leading to a full-year range of $5.13 to $5.28.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.8% due to these changes.
VGM Scores
At this time, Cabot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cabot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cabot belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Air Products and Chemicals (APD - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Air Products and Chemicals reported revenues of $3.03 billion in the last reported quarter, representing a year-over-year change of -4.9%. EPS of $2.98 for the same period compares with $2.62 a year ago.
Air Products and Chemicals is expected to post earnings of $3.12 per share for the current quarter, representing a year-over-year change of +8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Air Products and Chemicals. Also, the stock has a VGM Score of C.
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Why Is Cabot (CBT) Up 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Cabot (CBT - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cabot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Cabot’s Q3 Earnings & Revenues Miss Estimates, Fall Y/Y
Cabot recorded third-quarter fiscal 2023 (ending Jun 30, 2023) earnings of $1.43 per share, down from the year-ago quarter's $1.69.
CBT posted adjusted earnings of $1.42 per share, down from the year-ago quarter's figure of $1.73. Adjusted earnings lagged the Zacks Consensus Estimate of $1.56.
The company’s net sales in the third quarter were $968 million, which missed the Zacks Consensus Estimate of $1,145.3 million. Net sales decreased around 15.8% from the prior-year quarter.
Segment Highlights
Reinforcement Materials’ sales decreased around 14.5% year over year to $624 million in the reported quarter. It lagged our estimate of $683.2 million. Earnings before interest and tax (EBIT) in the segment were $132 million, up around 17% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing and better product mix in calendar-year 2023 customer agreements, which were partly offset by lower volumes.
In the reported quarter, sales in the Performance Chemicals division declined 18% year over year to $307 million, falling short of our projection of $443.2 million. EBIT also witnessed a substantial drop of approximately 49% to $32 million, primarily attributed to reduced volumes and an unfavorable product mix, largely stemming from challenges in key end markets. The most significant volume contraction was observed in the fumed metal oxides product line.
Financials
Cabot had cash and cash equivalents of $220 million at the end of the quarter, down around 5.7% year over year. The company’s long-term debt was $1,093 million.
Capital expenditures in the reported quarter were $80 million.
Cash flow from operating activities was $243 million in the quarter.
Cabot paid $23 million of dividends and repurchased shares worth $15 million in the reported quarter.
Outlook
The company expects steady sequential volumes and strong EBIT growth year over year in Reinforcement Materials due to pricing and mix benefits in customer agreements. For Performance Chemicals, it expects stable sequential volumes in major product lines, with moderate growth in battery materials and inkjet. Pricing pressure in China's EV value chain is expected to affect battery materials in the short term. Cabot expects EBITDA results for fiscal 2023 to be lower than its earlier communicated guidance. Fiscal fourth-quarter adjusted EPS is projected to be in the range of $1.40 to $1.55, leading to a full-year range of $5.13 to $5.28.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.8% due to these changes.
VGM Scores
At this time, Cabot has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cabot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cabot belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Air Products and Chemicals (APD - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Air Products and Chemicals reported revenues of $3.03 billion in the last reported quarter, representing a year-over-year change of -4.9%. EPS of $2.98 for the same period compares with $2.62 a year ago.
Air Products and Chemicals is expected to post earnings of $3.12 per share for the current quarter, representing a year-over-year change of +8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Air Products and Chemicals. Also, the stock has a VGM Score of C.