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Cabot (CBT) Amends Credit Facilities to Increase Flexibility
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Cabot Corporation (CBT - Free Report) announced that its revolving credit facilities were amended to increase the maximum leverage ratio permitted under the agreements.
The company’s maximum leverage ratio, applicable on the last day of each fiscal quarter, will increase to 4.5 times from 3.5 times for the term of the credit facilities. Notably, the increase will start with the quarter ending Sep 30, 2020, and continue through the quarter ending Jun 30, 2021.
Reportedly, there were no changes in material terms under the agreements. Moreover, the agreements are slated to mature in October 2022.
Per management, increasing the maximum leverage ratio is a prudent step in offering incremental headroom due to the demand uncertainties stemming from the coronavirus pandemic. Notably, the move is expected to provide additional flexibility beyond the coronavirus outbreak-related stress-test scenarios, which the company has evaluated.
Moreover, Cabot is confident enough to generate an anticipated strong cash flow in the second half of the fiscal year. Also, the company expects its strong balance sheet to allow it to successfully navigate through this period of uncertainty.
Shares of Cabot have lost 6.3% in the past year compared with the industry’s 8.1% decline.
On its fiscal second-quarter earnings call, Cabot stated that it expects demand to be low in the fiscal third quarter due to the impacts of the coronavirus pandemic.
For the Reinforcement Materials unit, the company expects a substantial reduction in demand in the fiscal third quarter on account of temporary customer shutdowns in Europe and America.
In the Performance Chemicals unit, it anticipates the challenging price environment for fumed silica in Europe and China to continue. Moreover, the company expects a decline in the automotive demand in Europe and America to negatively impact product mix in specialty carbons and compounds.
For the Purification Solutions unit, it expects a decrease in the quarterly EBIT on a year-over-year basis due to the impacts of the coronavirus outbreak.
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the basic materials space are Agnico Eagle Mines Limited (AEM - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Barrick Gold Corporation (GOLD - Free Report) .
Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 74.2% for 2020. The company’s shares have gained 25.9% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have surged 67.3% in the past year. It currently has a Zacks Rank #2 (Buy).
Barrick has a projected earnings growth rate of 64.7% for the current year. The company’s shares have rallied around 75% in a year. It currently has a Zacks Rank #2.
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Cabot (CBT) Amends Credit Facilities to Increase Flexibility
Cabot Corporation (CBT - Free Report) announced that its revolving credit facilities were amended to increase the maximum leverage ratio permitted under the agreements.
The company’s maximum leverage ratio, applicable on the last day of each fiscal quarter, will increase to 4.5 times from 3.5 times for the term of the credit facilities. Notably, the increase will start with the quarter ending Sep 30, 2020, and continue through the quarter ending Jun 30, 2021.
Reportedly, there were no changes in material terms under the agreements. Moreover, the agreements are slated to mature in October 2022.
Per management, increasing the maximum leverage ratio is a prudent step in offering incremental headroom due to the demand uncertainties stemming from the coronavirus pandemic. Notably, the move is expected to provide additional flexibility beyond the coronavirus outbreak-related stress-test scenarios, which the company has evaluated.
Moreover, Cabot is confident enough to generate an anticipated strong cash flow in the second half of the fiscal year. Also, the company expects its strong balance sheet to allow it to successfully navigate through this period of uncertainty.
Shares of Cabot have lost 6.3% in the past year compared with the industry’s 8.1% decline.
On its fiscal second-quarter earnings call, Cabot stated that it expects demand to be low in the fiscal third quarter due to the impacts of the coronavirus pandemic.
For the Reinforcement Materials unit, the company expects a substantial reduction in demand in the fiscal third quarter on account of temporary customer shutdowns in Europe and America.
In the Performance Chemicals unit, it anticipates the challenging price environment for fumed silica in Europe and China to continue. Moreover, the company expects a decline in the automotive demand in Europe and America to negatively impact product mix in specialty carbons and compounds.
For the Purification Solutions unit, it expects a decrease in the quarterly EBIT on a year-over-year basis due to the impacts of the coronavirus outbreak.
Cabot Corporation Price and Consensus
Cabot Corporation price-consensus-chart | Cabot Corporation Quote
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the basic materials space are Agnico Eagle Mines Limited (AEM - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Barrick Gold Corporation (GOLD - Free Report) .
Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 74.2% for 2020. The company’s shares have gained 25.9% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have surged 67.3% in the past year. It currently has a Zacks Rank #2 (Buy).
Barrick has a projected earnings growth rate of 64.7% for the current year. The company’s shares have rallied around 75% in a year. It currently has a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>