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Why Is Cabot (CBT) Up 12.8% 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 12.8% 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 catalysts.
Cabot’s Q2 Earnings and Revenues Surpass Estimates
Cabot recorded a profit of $75 million or $1.30 per share in the second quarter of fiscal 2021 (ended Mar 31, 2021) against a loss of $1 million or a penny per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.38 in the reported quarter, up from 77 cents in the year-ago quarter. The figure topped the Zacks Consensus Estimate of 97 cents.
Net sales increased 18.6% year over year to $842 million in the quarter. The metric beat the Zacks Consensus Estimate of $745.6 million. The company witnessed strength in volumes and favorable pricing in the Reinforcement Materials segment.
Segment Highlights
Reinforcement Materials’ sales increased 22.3% year over year to $434 million in the reported quarter. EBIT in the segment were $89 million, up from $61 million in the year-ago quarter. The upside can be attributed to improved pricing in Asia and significantly higher volumes across all regions. The segment witnessed higher volumes compared with prior-year quarter’s level, which was impacted by the pandemic shutdowns.
Sales in the Performance Chemicals unit went up around 20% year over year to $294 million in the reported quarter. EBIT increased 87.1% year over year to $58 million mainly due to increased volumes and improved product mix, courtesy of higher sales in automotive applications and target-growth initiatives.
Sales in Purification Solutions remained stable year over year at $63 million in the quarter. EBIT in the segment was $2 million, almost same as $3 in the prior year quarter. The downside in EBIT was due to reduced demand in mercury removal applications, partly offset by reduced fixed costs led by the sale of its mine on Marshall, TX and the related long-term activated carbon supply agreement.
Financial Position
Cabot had cash and cash equivalents of $146 million at the end of the second quarter, up 2.8% from the prior-year quarter’s level. The company’s long-term debt fell to $1,087 million from $1,190 million in the prior-year quarter.
Cash flow from operating activities was $65 million for the quarter, up from $24 million in the prior-year quarter.
Outlook
Cabot stated that it expects continued demand strength across all its segments in the second half of the fiscal. It also anticipates some impact from the flow-through of higher raw material costs in Asia, moderating volumes into automotive applications due to the shortage of semi-conductor chip and higher fixed costs due to the timing of scheduled maintenance activities. The company expects adjusted earnings per share for fiscal 2021 to be between $4.70 and $4.95.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 14.84% due to these changes.
VGM Scores
At this time, Cabot has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cabot has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Cabot (CBT) Up 12.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Cabot (CBT - Free Report) . Shares have added about 12.8% 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 catalysts.
Cabot’s Q2 Earnings and Revenues Surpass Estimates
Cabot recorded a profit of $75 million or $1.30 per share in the second quarter of fiscal 2021 (ended Mar 31, 2021) against a loss of $1 million or a penny per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.38 in the reported quarter, up from 77 cents in the year-ago quarter. The figure topped the Zacks Consensus Estimate of 97 cents.
Net sales increased 18.6% year over year to $842 million in the quarter. The metric beat the Zacks Consensus Estimate of $745.6 million. The company witnessed strength in volumes and favorable pricing in the Reinforcement Materials segment.
Segment Highlights
Reinforcement Materials’ sales increased 22.3% year over year to $434 million in the reported quarter. EBIT in the segment were $89 million, up from $61 million in the year-ago quarter. The upside can be attributed to improved pricing in Asia and significantly higher volumes across all regions. The segment witnessed higher volumes compared with prior-year quarter’s level, which was impacted by the pandemic shutdowns.
Sales in the Performance Chemicals unit went up around 20% year over year to $294 million in the reported quarter. EBIT increased 87.1% year over year to $58 million mainly due to increased volumes and improved product mix, courtesy of higher sales in automotive applications and target-growth initiatives.
Sales in Purification Solutions remained stable year over year at $63 million in the quarter. EBIT in the segment was $2 million, almost same as $3 in the prior year quarter. The downside in EBIT was due to reduced demand in mercury removal applications, partly offset by reduced fixed costs led by the sale of its mine on Marshall, TX and the related long-term activated carbon supply agreement.
Financial Position
Cabot had cash and cash equivalents of $146 million at the end of the second quarter, up 2.8% from the prior-year quarter’s level. The company’s long-term debt fell to $1,087 million from $1,190 million in the prior-year quarter.
Cash flow from operating activities was $65 million for the quarter, up from $24 million in the prior-year quarter.
Outlook
Cabot stated that it expects continued demand strength across all its segments in the second half of the fiscal. It also anticipates some impact from the flow-through of higher raw material costs in Asia, moderating volumes into automotive applications due to the shortage of semi-conductor chip and higher fixed costs due to the timing of scheduled maintenance activities. The company expects adjusted earnings per share for fiscal 2021 to be between $4.70 and $4.95.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 14.84% due to these changes.
VGM Scores
At this time, Cabot has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cabot has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.