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Cabot (CBT) Up 22% in 3 Months: What's Driving the Stock?
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Cabot Corporation’s (CBT - Free Report) shares have popped 21.9% over the past three months. The company has also outperformed its industry’s decline of 9.1% over the same time frame. Moreover, it has topped the S&P 500’s 10.4% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Favoring CBT?
Strong earnings performance in the first quarter of fiscal 2022 and upbeat prospects have contributed to the rally in the company's shares. Cabot’s adjusted earnings of $1.29 for the quarter rose from $1.18 in the year-ago quarter, and also topped the Zacks Consensus Estimate of $1.06. Net sales shot up around 30% year over year to $968 million and surpassed the Zacks Consensus Estimate of $815.2 million.
Cabot, in its first-quarter call, stated that it expects continued strong end-market demand and benefits from growth investments. Looking ahead to the balance of 2022, its Reinforcement Materials unit is expected to benefit from the customer agreements in the year. Growth in demand is anticipated for the Performance Chemicals segment, along with strength in battery materials and inkjet packaging.
Based on the positive outlook and strong fiscal first-quarter performance, the company raised its adjusted earnings per share outlook for fiscal 2022 to the range of $5.50-$5.90 from the previous view of $5.20-$5.60. For the second quarter of fiscal 2022, it also expects demand improvement across all its key product lines and a boost in profitability.
Cabot should gain from a recovery in demand from the pandemic-led slowdown, its disciplined execution of operations and targeted growth initiatives. The company is also well placed to benefit from its strategic acquisitions.
The company should benefit from the acquisition of Shenzhen Sanshun Nano New Materials. The acquisition significantly bolsters the market position and formulation capabilities of Cabot in the high-growth batteries market, especially in China. The buyout is also expected to create opportunities to expand Cabot’s position in the rapidly growing energy storage market.
The acquisition of the Tokai Carbon Black Plant, which was completed recently, is also expected to boost growth of the company’s Battery Materials product line. The Tokai site has a present annual capacity of 50,000 metric tons of carbon black and Cabot’s planned investment will add more steam to the capabilities of battery-grade production.
The buyout of Tokai Carbon is in sync with Cabot’s strategy of executing growth opportunities in high-growth and high-performance markets such as battery materials. The investment will enable it to better meet the demand for lithium-ion batteries and run its operations responsibly such that they reduce the environmental impact.
The company is also on track with its long-term guidance to generate more than $1 billion during the next three years and expects a strong free cash flow to fund high-growth investments. It is also committed to returning capital to shareholders through dividends and share repurchases.
Earnings estimates for Cabot have also been going up over the past two months. The Zacks Consensus Estimate for fiscal 2022 has increased around 7.8% while the same for fiscal 2023 has gone up 7.7%. The favorable estimate revisions instill investor confidence in the stock.
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Mosaic, sporting a Zacks Rank #1, has a projected earnings growth rate of 104.8% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 21.3% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 99% in a year.
AdvanSix, carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 17.3% for the current year. ASIX's consensus estimate for current-year earnings has been revised 12.4% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 48% in a year.
Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 31% in a year.
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Cabot (CBT) Up 22% in 3 Months: What's Driving the Stock?
Cabot Corporation’s (CBT - Free Report) shares have popped 21.9% over the past three months. The company has also outperformed its industry’s decline of 9.1% over the same time frame. Moreover, it has topped the S&P 500’s 10.4% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Favoring CBT?
Strong earnings performance in the first quarter of fiscal 2022 and upbeat prospects have contributed to the rally in the company's shares. Cabot’s adjusted earnings of $1.29 for the quarter rose from $1.18 in the year-ago quarter, and also topped the Zacks Consensus Estimate of $1.06. Net sales shot up around 30% year over year to $968 million and surpassed the Zacks Consensus Estimate of $815.2 million.
Cabot, in its first-quarter call, stated that it expects continued strong end-market demand and benefits from growth investments. Looking ahead to the balance of 2022, its Reinforcement Materials unit is expected to benefit from the customer agreements in the year. Growth in demand is anticipated for the Performance Chemicals segment, along with strength in battery materials and inkjet packaging.
Based on the positive outlook and strong fiscal first-quarter performance, the company raised its adjusted earnings per share outlook for fiscal 2022 to the range of $5.50-$5.90 from the previous view of $5.20-$5.60. For the second quarter of fiscal 2022, it also expects demand improvement across all its key product lines and a boost in profitability.
Cabot should gain from a recovery in demand from the pandemic-led slowdown, its disciplined execution of operations and targeted growth initiatives. The company is also well placed to benefit from its strategic acquisitions.
The company should benefit from the acquisition of Shenzhen Sanshun Nano New Materials. The acquisition significantly bolsters the market position and formulation capabilities of Cabot in the high-growth batteries market, especially in China. The buyout is also expected to create opportunities to expand Cabot’s position in the rapidly growing energy storage market.
The acquisition of the Tokai Carbon Black Plant, which was completed recently, is also expected to boost growth of the company’s Battery Materials product line. The Tokai site has a present annual capacity of 50,000 metric tons of carbon black and Cabot’s planned investment will add more steam to the capabilities of battery-grade production.
The buyout of Tokai Carbon is in sync with Cabot’s strategy of executing growth opportunities in high-growth and high-performance markets such as battery materials. The investment will enable it to better meet the demand for lithium-ion batteries and run its operations responsibly such that they reduce the environmental impact.
The company is also on track with its long-term guidance to generate more than $1 billion during the next three years and expects a strong free cash flow to fund high-growth investments. It is also committed to returning capital to shareholders through dividends and share repurchases.
Earnings estimates for Cabot have also been going up over the past two months. The Zacks Consensus Estimate for fiscal 2022 has increased around 7.8% while the same for fiscal 2023 has gone up 7.7%. The favorable estimate revisions instill investor confidence in the stock.
Cabot Corporation Price and Consensus
Cabot Corporation price-consensus-chart | Cabot Corporation Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Mosaic, sporting a Zacks Rank #1, has a projected earnings growth rate of 104.8% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 21.3% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 99% in a year.
AdvanSix, carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 17.3% for the current year. ASIX's consensus estimate for current-year earnings has been revised 12.4% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 48% in a year.
Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 31% in a year.