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Cabot (CBT) Up 11% in 3 Months: What's Driving the Stock?

·4-min read

Cabot Corporation’s CBT shares have gained 10.6% over the past three months. The company has also outperformed its industry’s decline of 0.9% over the same time frame. Moreover, it has topped the S&P 500’s 7.2% rise over the same period.

Let’s take a look into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

What’s Aiding CBT?

Solid fiscal third quarter results and upbeat outlook have contributed to the run-up in the company's shares. Cabot’s adjusted earnings of $1.73 per share for the third quarter of fiscal 2022 topped the Zacks Consensus Estimate of $1.53. Net sales climbed around 25% year over year to $1,149 million and surpassed the Zacks Consensus Estimate of $1,043 million.

Cabot tightened the range of its adjusted earnings per share outlook for fiscal 2022 to $6.10-$6.20 factoring in strong year-to-date results and its expectations for the fiscal fourth quarter. This is at the top-end of its earlier communicated range of $5.80-$6.20.

Cabot is expected to gain from a recovery in demand from the pandemic-led slowdown, its disciplined execution of operations and targeted growth initiatives. The company is also well placed to benefit from its strategic acquisitions.

The acquisition of the Tokai Carbon Black Plant is expected to boost growth of the company’s Battery Materials product line. The buyout is in sync with Cabot’s strategy of executing growth opportunities in high-growth and high-performance markets such as battery materials. The investment will enable it to better meet the demand for lithium-ion batteries and run its operations responsibly such that they reduce the environmental impact.

The company is also benefiting from strong underlying demand across its businesses. Higher volumes and favorable pricing are driving results in its Reinforcement Materials segment. The company is witnessing strong replacement tire demand.

Cabot’s pricing and product mix actions are also driving results in the Performance Chemicals unit. It is seeing strong momentum in battery materials applications with volumes rising 60% year over year in the fiscal third quarter. The company sees sequential volume growth in battery materials in the fiscal fourth quarter. It also expects the start-up of the new Xuzhou, China plant to support growth in both battery materials and specialty carbons.

 

Cabot Corporation Price and Consensus

 

Cabot Corporation Price and Consensus
Cabot Corporation Price and Consensus

Cabot Corporation price-consensus-chart | Cabot Corporation Quote

 

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Sociedad Quimica y Minera de Chile S.A. SQM, Albemarle Corporation ALB and Daqo New Energy Corp. DQ.

Sociedad has a projected earnings growth rate of 513.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 32.6% upward in the past 60 days.

Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has rallied roughly 116% in a year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle has a projected earnings growth rate of 405.2% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 61.3% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 30% in a year and currently carries a Zacks Rank #1.

Daqo New Energy, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 177.5% for the current year. The Zacks Consensus Estimate for DQ's earnings for the current fiscal has been revised 20.8% upward in the past 60 days.

Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. DQ has gained around 40% over a year.


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