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Cabot (CBT) Up 25% in 6 Months: What's Driving the Stock?

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Cabot Corporation’s (CBT - Free Report) shares have gained 24.9% over the past six months. The company has also outperformed its industry’s decline of 3.8% over the same time frame. Moreover, it has topped the S&P 500’s 16.2% decline over the same period.

Let’s take a look into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

What’s Aiding CBT?

Solid fiscal second quarter results and upbeat outlook have contributed to the run-up in the company's shares. Cabot’s adjusted earnings of $1.69 for the second quarter topped the Zacks Consensus Estimate of $1.40. Net sales climbed around 30% year over year to $1,092 million and surpassed the Zacks Consensus Estimate of $919 million.

Factoring in its strong first-half results and expectations for the second half of fiscal 2022, Cabot raised its adjusted earnings per share outlook for the fiscal year by 30 cents at the midpoint to a new range of $5.80-$6.20.

Cabot is expected to 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 acquisition of the Tokai Carbon Black Plant is expected to boost growth of the company’s Battery Materials product line. The buyout 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 benefiting from strong underlying demand across its businesses. Higher volumes and favorable pricing are driving results in its Reinforcement Materials segment. The company expects volumes to increase sequentially in the fiscal third quarter, driven by growth in Battery Materials applications.

Earnings estimates for Cabot have also been going up over the past two months. The Zacks Consensus Estimate for fiscal 2022 has increased around 5.2%. The consensus estimate for the fiscal third quarter has also been revised 3.3% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

 

Cabot Corporation Price and Consensus

 

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 Commercial Metals Company (CMC - Free Report) , Nutrien Ltd. (NTR - Free Report) and Albemarle Corporation (ALB - Free Report) .

Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 78.2% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 31.9% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 16%, on average. CMC has gained around 23% in a year.

Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 161.9% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 38.8% upward over the last 60 days.

Nutrien 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 5.8%, on average. NTR has rallied 63% in a year.

Albemarle has a projected earnings growth rate of 175% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 85.8% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 50% in a year. The company flaunts a Zacks Rank #1.