Yahoo Finance Why Is Cabot (CBT) Up 8.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Cabot (CBT). Shares have added about 8.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cabot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cabot's Earnings Top Estimates in Q2, Revenues Lag
Cabot recorded second-quarter fiscal 2023 (ending Mar 31, 2023) earnings of $1.29 per share, down from the year-ago quarter's earnings of $1.84.
Cabot posted adjusted earnings of $1.33 per share, down from the year-ago quarter's figure of $1.69. It, however, surpassed the Zacks Consensus Estimate of $1.28.
The company’s net sales in the second quarter were $1,033 million, which missed the Zacks Consensus Estimate of $1,051.1 million. Net sales decreased around 5% from the prior-year quarter.
Segment Highlights
Reinforcement Materials’ sales increased around 3% year over year to $672 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $122 million, up around 21% from the year-ago quarter. The upside can be attributed to improved unit margins from higher pricing and better product mix in the calendar year 2022 customer agreements, which were partly offset by higher costs and lower volumes partly due to the impact of the COVID outbreak in China.
Sales in the Performance Chemicals unit went down around 10% year over year to $326 million in the reported quarter. EBIT decreased around 60% to $28 million, mainly due to decreased volumes resulting from the weakness in major end markets and the COVID outbreak in China as well as reduced unit margins in the fumed metal oxides product line.
Financials
Cabot had cash and cash equivalents of $205 million at the end of the quarter, down around 5% year over year. The company’s long-term debt was $1,094 million, up about 0.6% year over year.
Capital expenditures in the reported quarter were $51 million.
Cash flow from operating activities was $162 million in the quarter.
Cabot paid $21 million of dividends and also repurchased shares worth $16 million in the reported quarter.
The company raised its quarterly dividend by 8% to 40 cents per share.
Outlook
Moving ahead, Cabot said that its outlook for the Reinforcement Materials unit remains strong. In Performance Chemicals, it is seeing improved demand sequentially and expects this to continue through fiscal 2023. However, the pace of demand recovery and volume momentum in Performance Chemicals end markets is weaker than what it had expected in the last quarter, Cabot noted. The company now expects adjusted earnings per share for fiscal 2023 in the range of $6.10-$6.50.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Cabot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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 is part of the Zacks Chemical - Diversified industry. Over the past month, Methanex (MEOH), a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended March 2023 more than a month ago.
Methanex reported revenues of $1.04 billion in the last reported quarter, representing a year-over-year change of -11.7%. EPS of $1.11 for the same period compares with $2.16 a year ago.
Methanex is expected to post earnings of $0.72 per share for the current quarter, representing a year-over-year change of -37.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.7%.
Methanex has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Cabot Corporation (CBT) : Free Stock Analysis Report
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