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Cabot (CBT) Up 8.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Cabot (CBT - Free Report) . Shares have added about 8.7% 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 Q2 Earnings and Revenues Surpass Estimates
Cabot recorded a profit of $107 million or $1.84 per share in the second quarter of fiscal 2022 (ended Mar 31, 2022) compared with $75 million or $1.30 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.69 in the reported quarter, up from $1.38 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.40.
Net sales increased 29.7% year over year to $1,092 million in the quarter. The metric beat the Zacks Consensus Estimate of $919 million. The company witnessed strength in volumes and favorable pricing in the Reinforcement Materials segment. Its Performance Chemicals unit also gained from price increases across all regions.
Segment Highlights
Reinforcement Materials’ sales increased 44.5% year over year to $627 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $101 million, up from $89 million in 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 22.4% year over year to $360 million in the reported quarter. EBIT increased 20.7% year over year to $70 million mainly due to higher unit margins, driven by price increases and product mix in the specialty carbons and fumed metal oxides product lines.
Sales in Purification Solutions declined 42.5% year over year to $36 million in the quarter.
Financial Position
Cabot had cash and cash equivalents of $215 million at the end of the second quarter, up 47.3% from the prior-year quarter’s level. The company’s long-term debt fell to $711 million from $1,087 million in the prior-year quarter.
Capital expenditures for the second quarter were $41 million.
Cash flow from operating activities was $10 million for the quarter, down from $65 million in the prior-year quarter.
Outlook
Cabot stated that it is well positioned to deliver record adjusted earnings per share for the fiscal year. Factoring in its strong first-half results and expectations for the second half of fiscal 2022, it 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.
Its ability to deliver exceptional results in both segments reflects the strength of the portfolio, the agility and strong execution of its teams and the value customers place on Cabot’s product offerings. These factors and growth investments position it well for fiscal 2022 and the coming years, the company noted.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Cabot has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cabot has a Zacks Rank #1 (Strong Buy). We expect an above average 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, Huntsman (HUN - Free Report) , a stock from the same industry, has gained 5.3%. The company reported its results for the quarter ended March 2022 more than a month ago.
Huntsman reported revenues of $2.39 billion in the last reported quarter, representing a year-over-year change of +30.1%. EPS of $1.19 for the same period compares with $0.66 a year ago.
Huntsman is expected to post earnings of $1.14 per share for the current quarter, representing a year-over-year change of +32.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +6%.
Huntsman 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 B.
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Cabot (CBT) Up 8.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Cabot (CBT - Free Report) . Shares have added about 8.7% 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 Q2 Earnings and Revenues Surpass Estimates
Cabot recorded a profit of $107 million or $1.84 per share in the second quarter of fiscal 2022 (ended Mar 31, 2022) compared with $75 million or $1.30 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.69 in the reported quarter, up from $1.38 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $1.40.
Net sales increased 29.7% year over year to $1,092 million in the quarter. The metric beat the Zacks Consensus Estimate of $919 million. The company witnessed strength in volumes and favorable pricing in the Reinforcement Materials segment. Its Performance Chemicals unit also gained from price increases across all regions.
Segment Highlights
Reinforcement Materials’ sales increased 44.5% year over year to $627 million in the reported quarter. Earnings before interest and tax (EBIT) in the segment were $101 million, up from $89 million in 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 22.4% year over year to $360 million in the reported quarter. EBIT increased 20.7% year over year to $70 million mainly due to higher unit margins, driven by price increases and product mix in the specialty carbons and fumed metal oxides product lines.
Sales in Purification Solutions declined 42.5% year over year to $36 million in the quarter.
Financial Position
Cabot had cash and cash equivalents of $215 million at the end of the second quarter, up 47.3% from the prior-year quarter’s level. The company’s long-term debt fell to $711 million from $1,087 million in the prior-year quarter.
Capital expenditures for the second quarter were $41 million.
Cash flow from operating activities was $10 million for the quarter, down from $65 million in the prior-year quarter.
Outlook
Cabot stated that it is well positioned to deliver record adjusted earnings per share for the fiscal year. Factoring in its strong first-half results and expectations for the second half of fiscal 2022, it 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.
Its ability to deliver exceptional results in both segments reflects the strength of the portfolio, the agility and strong execution of its teams and the value customers place on Cabot’s product offerings. These factors and growth investments position it well for fiscal 2022 and the coming years, the company noted.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Cabot has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cabot has a Zacks Rank #1 (Strong Buy). We expect an above average 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, Huntsman (HUN - Free Report) , a stock from the same industry, has gained 5.3%. The company reported its results for the quarter ended March 2022 more than a month ago.
Huntsman reported revenues of $2.39 billion in the last reported quarter, representing a year-over-year change of +30.1%. EPS of $1.19 for the same period compares with $0.66 a year ago.
Huntsman is expected to post earnings of $1.14 per share for the current quarter, representing a year-over-year change of +32.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +6%.
Huntsman 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 B.