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Cabot Corporation (CBT)
NYSE:CBT
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Cabot
(NYSE:CBT)
70Outperform
Positive Factors
Buyback Authorization
Buyback authorization recently increased to 10 million shares (18%+ of outstanding).
Performance Chemicals Growth
Performance Chemicals targeting 17% midpt EBIT 3-year CAGR with expansions in EV battery materials underway in U.S., Europe & China.
Negative Factors
Construction and Industrial Demand
Construction and industrial weakness will likely continue to weigh on demand for specialty blacks and fumed silicas.
Consumer Confidence
With consumer confidence now at a 12-year low, a consumer-led rebound appears unlikely.
Cabot (CBT) vs. S&P 500 (SPY)
Market Cap
$4.55B
Dividend Yield2.06%
Average Volume (3M)463.72K
Price to Earnings (P/E)11.1
Beta (1Y)1.13
Revenue Growth1.71%
EPS Growth-2.43%
CountryUS
Employees4,200
SectorBasic Materials
Sector Strength58
IndustryChemicals
Share Statistics
EPS (TTM)7.54
Shares Outstanding54,221,493
10 Day Avg. Volume422,096
30 Day Avg. Volume463,721
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.12
Price to Cash Flow (P/CF)9.00
P/FCF Ratio8.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$101.25Price Target Upside20.39% Upside
Rating ConsensusHold
Number of Analyst Covering4
Cabot Business Overview & Revenue Model
Company DescriptionCabot Corporation operates as a specialty chemicals and performance materials company. It operates through three segments: Reinforcement Materials, Performance Chemicals, and Purification Solutions. The company offers reinforcing carbons used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites. It also provides specialty carbons used in inks, coatings, plastics, adhesives, toners, batteries, and displays applications; masterbatch and conductive compound products for use in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; inkjet colorants used in the inkjet printing applications; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; fumed alumina used in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries; and aerogel, a hydrophobic, silica-based particle for use in various thermal insulation and specialty chemical applications. In addition, the company offers activated carbon products used for the purification of water, air, food and beverages, pharmaceuticals, and other liquids and gases; and activated carbon solutions for activated carbon injection in coal-fired utilities, mobile water filter units, and carbon reactivation services. The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.
How the Company Makes MoneyCabot Corporation generates revenue primarily through the sale of its specialty chemicals and performance materials. The company's Reinforcement Materials segment is a major revenue driver, providing rubber blacks used in tires and industrial products. The Performance Chemicals segment contributes through the sale of fumed silica, fumed alumina, and aerogel materials used in adhesives, coatings, and energy storage applications. Additionally, Cabot's Purification Solutions segment, which offers activated carbon products used for air, water, and food purification, also contributes to its earnings. Cabot's global footprint, strategic partnerships with key customers, and ongoing investments in research and development to innovate and enhance its product offerings are significant factors in the company's revenue generation.
Cabot Financial Statement Overview
Summary
Cabot demonstrates strong profitability and cash flow generation, with stable margins despite a slight revenue decline. The company maintains robust cash flow management and effective debt handling, although limited equity backing could pose risks if liabilities increase.Income Statement
Cabot's TTM (Trailing-Twelve-Months) income statement shows a solid gross profit margin of 24.5% and net profit margin of 10.6%. The company has seen a revenue decline of 0.1% from the previous fiscal year, but its EBIT and EBITDA margins remain strong at 15.9% and 18.9% respectively. Stability in operating performance is evident, although the slight revenue decline suggests potential market challenges.75
Positive
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio of 0.80, indicating manageable leverage. The return on equity (ROE) is robust at 31.0%, suggesting efficient use of equity. However, the equity ratio is 36.6%, highlighting somewhat limited asset backing by equity, which might pose risks if liabilities increase.68
Positive
Cash Flow
Cabot demonstrates strong cash flow management with a free cash flow growth rate of 27.4% in the TTM period. The operating cash flow to net income ratio is 1.68, indicating effective conversion of profits into cash. Additionally, the free cash flow to net income ratio of 1.06 reflects a healthy cash generation capability relative to earnings.80
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.99B | 3.99B | 3.93B | 4.32B | 3.41B | 2.61B | Gross Profit |
| 978.00M | 960.00M | 839.00M | 885.00M | 799.00M | 500.00M | EBIT |
| 634.00M | 614.00M | 526.00M | 574.00M | 454.00M | 150.00M | EBITDA |
| 800.00M | 761.00M | 673.00M | 705.00M | 593.00M | 306.00M | Net Income Common Stockholders |
| 423.00M | 380.00M | 445.00M | 209.00M | 250.00M | -224.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 183.00M | 223.00M | 238.00M | 206.00M | 168.00M | 151.00M | Total Assets |
| 3.64B | 3.74B | 3.60B | 3.52B | 3.31B | 2.78B | Total Debt |
| 1.20B | 1.14B | 1.28B | 1.44B | 1.16B | 1.11B | Net Debt |
| 1.01B | 917.00M | 1.04B | 1.24B | 994.00M | 964.00M | Total Liabilities |
| 2.13B | 2.15B | 2.20B | 2.49B | 2.22B | 1.97B | Stockholders Equity |
| 1.37B | 1.43B | 1.26B | 898.00M | 947.00M | 691.00M |
| Cash Flow | Free Cash Flow | ||||
| 447.00M | 451.00M | 351.00M | -111.00M | 62.00M | 177.00M | Operating Cash Flow |
| 711.00M | 692.00M | 595.00M | 100.00M | 257.00M | 377.00M | Investing Cash Flow |
| -285.00M | -235.00M | -214.00M | -118.00M | -186.00M | -288.00M | Financing Cash Flow |
| -410.00M | -415.00M | -403.00M | 145.00M | -60.00M | -132.00M |
Cabot Technical Analysis
Neutral
84.10
Price Trends
85.70
Negative
93.84
Negative
97.25
Negative
Market Momentum
-0.63
Negative
48.95
Neutral
75.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CBT, the sentiment is Neutral. The current price of 84.1 is above the 20-day moving average (MA) of 83.56, below the 50-day MA of 85.70, and below the 200-day MA of 97.25, indicating a neutral trend. The MACD of -0.63 indicates Negative momentum. The RSI at 48.95 is Neutral, neither overbought nor oversold. The STOCH value of 75.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CBT.
Cabot Risk Analysis
Cabot disclosed 21 risk factors in its most recent earnings report. Cabot reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cabot Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $10.27B | 11.67 | 16.11% | 3.64% | 1.91% | 2.94% | |
70 Outperform | $4.55B | 11.12 | 31.02% | 2.06% | 1.71% | -2.43% | |
68 Neutral | $3.50B | 21.29 | 7.32% | 2.66% | 3.11% | 123.46% | |
67 Neutral | $3.12B | 23.62 | 6.35% | 1.64% | 0.99% | -27.62% | |
57 Neutral | $2.82B | 21.03 | 0.18% | 2.71% | -4.35% | -115.63% | |
50 Neutral | $6.61B | 6.84 | -24.69% | 3.60% | -6.03% | -177.29% | |
47 Neutral | $2.71B | -3.60 | -20.77% | 3.28% | 3.41% | -27.70% |
* Basic Materials Sector Average
Performance Comparison
CBT
Cabot
84.10
-7.07
-7.75%
ASH
Ashland
59.75
-35.50
-37.27%
CE
Celanese
58.23
-110.24
-65.44%
EMN
Eastman Chemical
88.92
-8.05
-8.30%
FUL
H.B. Fuller Company
57.61
-20.37
-26.12%
AVNT
Avient
38.33
-3.64
-8.67%
Cabot Earnings Call Summary
Earnings Call Date: Feb 3, 2025 | % Change Since: -0.40% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Neutral
Cabot Corporation had a strong start to fiscal year 2025, with impressive growth in the Performance Chemicals segment and strong cashflow generation. However, challenges in the Reinforcement Materials segment and competitive pressures in the Americas present concerns. Overall, the company's strategic alignment with key macro trends and consistent shareholder returns paint a positive outlook, despite certain market challenges.Highlights
Strong Start to Fiscal Year 2025
Cabot delivered adjusted earnings per share of $1.76, up 13% compared to the same period in the prior year, indicating a strong start to fiscal year 2025.
Performance Chemicals Segment Success
EBIT in Performance Chemicals was up 32% compared to the first quarter of fiscal 2024, primarily due to higher volumes.
Significant Cashflow Generation
Operating cashflow was strong at $124 million, supporting various capital projects and shareholder returns through dividends and share repurchases.
Consistent Shareholder Returns
Cabot returned $66 million to shareholders through dividends and share repurchases in the quarter.
Global Infrastructure and Sustainability Trends
Cabot's portfolio is aligned with key macro trends such as electric vehicles, global infrastructure buildout, and sustainability transitions, supporting future growth.
Lowlights
Challenging Global Environment for Reinforcement Materials
EBIT in Reinforcement Materials was up only 1% year-over-year due to a challenging global environment, including less favorable geographic mix and lower energy center revenue.
Flat Demand in Key End Markets
Global production levels for tire and auto markets are expected to be relatively flat year-over-year, which impacts volume growth expectations.
Competitive Pressure in North and South America
Volumes in the Americas were challenged due to competitive pressures from imported Asian tires, affecting demand outlook.
Tariff Uncertainties
Potential tariffs between the US and trading partners like China, Mexico, and Canada could impact demand and operations, though the direct impact is expected to be minimal.
Company Guidance
During the Cabot Corporation's First Quarter 2025 Earnings Conference Call, several key metrics and guidance points were discussed. The company reported an adjusted earnings per share of $1.76, marking a 13% increase compared to the previous year. EBIT for Reinforcement Materials reached $130 million, a 1% rise year-over-year, while Performance Chemicals saw a 32% EBIT increase due to higher volumes. Operating cash flow was $124 million, with capital expenditures at $77 million, including growth investments in Indonesia and battery materials. Cabot returned $66 million to shareholders through dividends and share buybacks. For fiscal year 2025, they reaffirmed an adjusted earnings per share outlook of $7.40 to $7.80 and projected capital spending between $250 million to $300 million. The company anticipates continued EBIT strength in Reinforcement Materials and expects Performance Chemicals EBIT to remain in the $45 million to $55 million range per quarter. Overall, Cabot is focused on strategic growth and disciplined capital allocation while maintaining a strong investment-grade balance sheet.Cabot Corporate Events
Business Operations and StrategyFinancial Disclosures
Cabot Unveils 2024 Strategy for Sustainable Growth
Positive
Dec 4, 2024
Cabot Corporation’s 2024 Investor Day highlights its “Creating for Tomorrow” strategy, focusing on growth, innovation, and optimization to enhance sustainability and deliver significant financial results. The company aims for an Adjusted EPS CAGR of 7-10% and Adjusted EBITDA of $0.9-$1 billion by 2027, while maintaining a strong balance sheet and investment-grade credit rating. Cabot continues to invest in high-growth areas, such as battery materials, to meet rising demand and create long-term value for shareholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.