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Cabot (CBT) Earnings Surpass Estimates in Q2, Sales Miss
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Cabot Corporation (CBT - Free Report) slipped to a loss of $1 million or a penny per share in the second quarter of fiscal 2020 (ended Mar 31, 2020) from a profit of $23 million or 39 cents per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were 77 cents, down from 99 cents in the year-ago quarter. Also, the figure surpassed the Zacks Consensus Estimate of 71 cents.
Net sales fell 15.9% year over year to $710 million in the quarter. It also lagged the Zacks Consensus Estimate of $773.9 million.
Cabot Corporation Price, Consensus and EPS Surprise
Reinforcement Materials’ sales fell 20.2% year over year to $355 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $61 million, flat with the year-ago quarter.
Sales in the Performance Chemicals unit went down 3.5% year over year to $245 million in the reported quarter. EBIT fell 18.4% year over year to $31 million on lower margins from competitive pricing environment and softer product mix.
Sales in the Purification Solutions declined 11.1% year over year to $64 million in the quarter. EBIT rose 200% year over year to $3 million on higher margins from better pricing and product mix.
Financial Position
Cabot had cash and cash equivalents of $142 million at the end of the fiscal second quarter, down 19.3% year over year. The company’s long-term debt rose 77% year over year to $1,190 million.
Cash flow from operating activities was $24 million in the reported quarter. Capital expenditure was $51 million.
The company also returned $30 million through share repurchases and dividends to its shareholders during the quarter.
Outlook
Cabot expects demand to be low in the fiscal third quarter due to the impacts of the coronavirus pandemic.
For the Reinforcement Materials unit, the company expects a substantial reduction in demand in the fiscal third quarter on account of temporary customer shutdowns in Europe and America.
In the Performance Chemicals unit, it anticipates the challenging price environment for fumed silica in Europe and China to continue. Moreover, the company expects a decline in automotive demand in Europe and America to negatively impact product mix in specialty carbons and compounds.
For the Purification Solutions unit, it expects a decrease in quarterly EBIT on a year-over-year basis due to the impacts of the coronavirus outbreak.
Price Performance
Shares of Cabot have lost 27.7% in the past year compared with the industry’s 24.3% decline.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the basic materials space are Equinox Gold Corp. (EQX - Free Report) , Newmont Corporation (NEM - Free Report) and Barrick Gold Corporation (GOLD - Free Report) .
Equinox Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 231% for 2020. The company’s shares have gained 43.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Newmont has a projected earnings growth rate of 85.6% for the current year. The company’s shares have rallied around 103% in a year. It currently has a Zacks Rank #2 (Buy).
Barrick has a projected earnings growth rate of 70.6% for 2020. It currently carries a Zacks Rank #2. The company’s shares have rallied 111.4% in a year.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
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Cabot (CBT) Earnings Surpass Estimates in Q2, Sales Miss
Cabot Corporation (CBT - Free Report) slipped to a loss of $1 million or a penny per share in the second quarter of fiscal 2020 (ended Mar 31, 2020) from a profit of $23 million or 39 cents per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were 77 cents, down from 99 cents in the year-ago quarter. Also, the figure surpassed the Zacks Consensus Estimate of 71 cents.
Net sales fell 15.9% year over year to $710 million in the quarter. It also lagged the Zacks Consensus Estimate of $773.9 million.
Cabot Corporation Price, Consensus and EPS Surprise
Cabot Corporation price-consensus-eps-surprise-chart | Cabot Corporation Quote
Segment Highlights
Reinforcement Materials’ sales fell 20.2% year over year to $355 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $61 million, flat with the year-ago quarter.
Sales in the Performance Chemicals unit went down 3.5% year over year to $245 million in the reported quarter. EBIT fell 18.4% year over year to $31 million on lower margins from competitive pricing environment and softer product mix.
Sales in the Purification Solutions declined 11.1% year over year to $64 million in the quarter. EBIT rose 200% year over year to $3 million on higher margins from better pricing and product mix.
Financial Position
Cabot had cash and cash equivalents of $142 million at the end of the fiscal second quarter, down 19.3% year over year. The company’s long-term debt rose 77% year over year to $1,190 million.
Cash flow from operating activities was $24 million in the reported quarter. Capital expenditure was $51 million.
The company also returned $30 million through share repurchases and dividends to its shareholders during the quarter.
Outlook
Cabot expects demand to be low in the fiscal third quarter due to the impacts of the coronavirus pandemic.
For the Reinforcement Materials unit, the company expects a substantial reduction in demand in the fiscal third quarter on account of temporary customer shutdowns in Europe and America.
In the Performance Chemicals unit, it anticipates the challenging price environment for fumed silica in Europe and China to continue. Moreover, the company expects a decline in automotive demand in Europe and America to negatively impact product mix in specialty carbons and compounds.
For the Purification Solutions unit, it expects a decrease in quarterly EBIT on a year-over-year basis due to the impacts of the coronavirus outbreak.
Price Performance
Shares of Cabot have lost 27.7% in the past year compared with the industry’s 24.3% decline.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the basic materials space are Equinox Gold Corp. (EQX - Free Report) , Newmont Corporation (NEM - Free Report) and Barrick Gold Corporation (GOLD - Free Report) .
Equinox Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 231% for 2020. The company’s shares have gained 43.7% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Newmont has a projected earnings growth rate of 85.6% for the current year. The company’s shares have rallied around 103% in a year. It currently has a Zacks Rank #2 (Buy).
Barrick has a projected earnings growth rate of 70.6% for 2020. It currently carries a Zacks Rank #2. The company’s shares have rallied 111.4% in a year.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
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