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Cabot (CBT) and SunPower Enter Solar Plus Storage Agreement

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Cabot Corporation (CBT - Free Report) has landed an agreement with SunPower to install a solar project of 1.12-megawatt, paired with a 470-kilowatt integrated energy storage system at Cabot's Business and Technology Center in Billerica, MA. Notably, the agreement will aid Cabot in its long-term effort to sustainability, by helping to advance solar development in the state. The agreement also helps in meeting Massachusetts' renewable energy commitments.

The construction is scheduled to start during summer 2019. The integrated project will feature high-efficiency SunPower solar panels installed across multiple solar parking canopies, which is likely to produce sufficient electricity to offset 20% of the facility's energy needs, thus reducing Cabot's grid energy costs. The energy storage system will provide additional savings by reducing electricity demand charges during peak hours.

According to Cabot, the investment demonstrates the value of renewable energy while also delivering the additional benefit of providing automobile charging stations and solar parking canopies for the company’s employees.

Cabot has entered into a power purchase agreement (PPA) to finance Helix solar-plus-storage project. The agreement is arranged by SunPower allowing Cabot to buy power at competitive prices and hedge any future utility rate hike. To encourage solar development, the project will be buoyed by the new Solar Massachusetts Renewable Target (SMART) Program, established by Massachusetts Department of Energy Resources (DOER). SunPower's Helix solar and storage solutions are designed to maximize value for customers.

Shares of Cabot have lost 22.7% in the past three months compared with the industry’s 13.4% decline.

Cabot’s adjusted earnings per share (EPS) for fiscal 2018 rose 13.8% year over year to $4.03, while net sales increased 19.3% year over year to $3,242 million.

According to Cabot, record financial performance in fiscal 2018 demonstrates its commitment and successful execution of corporate strategy across the globe.

Cabot expects adjusted EPS for fiscal 2019 in the range of $4.35 to $4.75. Per the company, its Reinforcement Materials division is expected to benefit from positive 2019 customer agreements and strong market position in Asia. The Performance Chemicals unit is forecast to return to a more normalized EBIT run-rate after the large turnarounds in the fiscal fourth quarter.  The company also expects benefits from recent growth investments to materialize. The Purification Solutions segment is expected to gain from a targeted improvement plan that is currently under process. The Specialty Fluids unit is expected to continue its recent strong performance into fiscal 2019.

Cabot Corporation Price and Consensus


Zacks Rank & Stocks to Consider

Cabot currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are CF Industries Holdings, Inc. (CF - Free Report) , The Mosaic Company (MOS - Free Report) and KMG Chemicals, Inc. .

CF Industries has an expected long-term earnings growth rate of 6% and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 24.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mosaic has an expected long-term earnings growth rate of 7% and a Zacks Rank #1. The stock has rallied 58.9% in the past year.

KMG Chemicals has an expected long-term earnings growth rate of 28.5% and a Zacks Rank #2 (Buy). Its shares have risen 47.3% in a year’s time.

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