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Cabot (CBT) Down 1.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Cabot (CBT - Free Report) . Shares have lost about 1.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? 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 Earnings and Sales Surpass Estimates in Q3
Cabot recorded a profit of $97 million or $1.69 per share in the third quarter of fiscal 2022 (ended Jun 30, 2022) compared with $86 million or $1.48 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.73 in the reported quarter, up from $1.35 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.53. Our estimate for the quarter was $1.53.
Net sales increased around 25% year over year to $1,149 million in the quarter. It beat the Zacks Consensus Estimate by 10.15%. Our estimate for the quarter was $1,043.5 million.
The company’s results were aided by higher margins and stronger volumes across the board. Battery Materials delivered strong volume and earnings growth in the quarter with volumes rising 60% year over year. The company achieved strong performance in the quarter notwithstanding the impacts of pandemic-led lockdowns in China, sustained logistics challenges and higher energy and raw material costs.
Segment Highlights
Reinforcement Materials’ sales increased around 48% year over year to $707 million in the reported quarter. This compares to the consensus estimate of $626.9 million and our estimate of $628.8 million. Earnings before interest and tax (EBIT) in the segment were $113 million, up around 33% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing in the calendar year 2022 customer agreements and higher volumes across all regions.
Sales in the Performance Chemicals unit went up around 23% year over year to $372 million in the reported quarter. This compares to the consensus estimate of $332.8 million and our estimate of $326.4 million. EBIT increased around 17% year over year to $63 million mainly due to higher unit margins, driven by price increases and product mix in the specialty carbons and fumed metal oxides product lines.
Financial Position
Cabot had cash and cash equivalents of $208 million at the end of the quarter, up around 20% from the prior-year quarter’s level. The company’s long-term debt was $1,097 million, up around 0.8% from the prior-year quarter.
Capital expenditures for the reported quarter were $50 million.
Cash flow from operating activities was $34 million for the quarter.
Outlook
Cabot tightened the range of its adjusted earnings per share outlook for fiscal 2022 to $6.10-$6.20 factoring in strong year-to-date results and its expectations for the fiscal fourth quarter. This is at the top-end of its earlier communicated range of $5.80-$6.20. The company expects normal seasonal impacts on its volumes and higher levels of maintenance activity in the fourth quarter and anticipates continued strong pricing execution.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -9.92% due to these changes.
VGM Scores
Currently, Cabot has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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, Albemarle (ALB - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
Albemarle reported revenues of $1.48 billion in the last reported quarter, representing a year-over-year change of +91.2%. EPS of $3.45 for the same period compares with $0.89 a year ago.
For the current quarter, Albemarle is expected to post earnings of $6.48 per share, indicating a change of +517.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +19.2% over the last 30 days.
Albemarle has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Cabot (CBT) Down 1.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Cabot (CBT - Free Report) . Shares have lost about 1.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? 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 Earnings and Sales Surpass Estimates in Q3
Cabot recorded a profit of $97 million or $1.69 per share in the third quarter of fiscal 2022 (ended Jun 30, 2022) compared with $86 million or $1.48 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.73 in the reported quarter, up from $1.35 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.53. Our estimate for the quarter was $1.53.
Net sales increased around 25% year over year to $1,149 million in the quarter. It beat the Zacks Consensus Estimate by 10.15%. Our estimate for the quarter was $1,043.5 million.
The company’s results were aided by higher margins and stronger volumes across the board. Battery Materials delivered strong volume and earnings growth in the quarter with volumes rising 60% year over year. The company achieved strong performance in the quarter notwithstanding the impacts of pandemic-led lockdowns in China, sustained logistics challenges and higher energy and raw material costs.
Segment Highlights
Reinforcement Materials’ sales increased around 48% year over year to $707 million in the reported quarter. This compares to the consensus estimate of $626.9 million and our estimate of $628.8 million. Earnings before interest and tax (EBIT) in the segment were $113 million, up around 33% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing in the calendar year 2022 customer agreements and higher volumes across all regions.
Sales in the Performance Chemicals unit went up around 23% year over year to $372 million in the reported quarter. This compares to the consensus estimate of $332.8 million and our estimate of $326.4 million. EBIT increased around 17% year over year to $63 million mainly due to higher unit margins, driven by price increases and product mix in the specialty carbons and fumed metal oxides product lines.
Financial Position
Cabot had cash and cash equivalents of $208 million at the end of the quarter, up around 20% from the prior-year quarter’s level. The company’s long-term debt was $1,097 million, up around 0.8% from the prior-year quarter.
Capital expenditures for the reported quarter were $50 million.
Cash flow from operating activities was $34 million for the quarter.
Outlook
Cabot tightened the range of its adjusted earnings per share outlook for fiscal 2022 to $6.10-$6.20 factoring in strong year-to-date results and its expectations for the fiscal fourth quarter. This is at the top-end of its earlier communicated range of $5.80-$6.20. The company expects normal seasonal impacts on its volumes and higher levels of maintenance activity in the fourth quarter and anticipates continued strong pricing execution.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -9.92% due to these changes.
VGM Scores
Currently, Cabot has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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, Albemarle (ALB - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
Albemarle reported revenues of $1.48 billion in the last reported quarter, representing a year-over-year change of +91.2%. EPS of $3.45 for the same period compares with $0.89 a year ago.
For the current quarter, Albemarle is expected to post earnings of $6.48 per share, indicating a change of +517.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +19.2% over the last 30 days.
Albemarle has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.