Cabot Corporation
’s
CBT
shares have popped 24.3% over the past three months. The company has also outperformed its
industry
’s rise of 7% over the same time frame. Moreover, it has topped the S&P 500’s 3.8% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #2 (Buy) stock.
What’s Going in CBT’s Favor?
Better-than-expected earnings performance in the first quarter of fiscal 2021 and upbeat prospects have contributed to the run-up in the company’s shares. Cabot’s adjusted earnings per share for the fiscal first quarter rose to $1.18 from 69 cents in the year-ago quarter. It also topped the Zacks Consensus Estimate of 87 cents. Net sales went up around 3% year over year to $746 million in the quarter and also surpassed the Zacks Consensus Estimate of $691.6 million.
Cabot gained from strong volumes and unit margins in its Reinforcement Materials segment in the fiscal first quarter. Its Performance Chemicals segment also benefited from higher volumes and improved product mix in specialty carbons and compounds product lines on the back of higher sales in automotive applications.
The company envisions conditions to remain favorable over the near term. It projects strength in demand in the fiscal second quarter. The company also sees Reinforcement Materials volumes to remain strong in the fiscal second quarter.
Cabot should gain from a recovery in demand from its automotive and tire customers from the pandemic-led slowdown, its disciplined execution of operations and targeted growth initiatives. The company saw strong volumes in the tire and automotive markets in the first quarter on the back of continued global recovery.
The company should also benefit from the acquisition of Shenzhen Sanshun Nano New Materials. The acquisition significantly bolsters the market position and formulation capabilities of Cabot in the high-growth batteries market, especially in China. The buyout is also expected to create opportunities to expand Cabot’s position in the rapidly growing energy storage market.
Cabot Corporation Price and Consensus
Cabot Corporation price-consensus-chart
|
Cabot Corporation Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include
Fortescue Metals Group Limited
FSUGY
and
BHP Group
BHP
,
Impala Platinum Holdings Limited
IMPUY
.
Fortescue has a projected earnings growth rate of 95.4% for the current fiscal. The company’s shares have surged around 182% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
BHP Group has a projected earnings growth rate of 69.3% for the current fiscal year. The company’s shares have shot up around 101% in a year. It currently carries a Zacks Rank #1.
Impala Platinum has an expected earnings growth rate of 187% for the current fiscal. The company’s shares have rallied around 142% in the past year. It currently carries a Zacks Rank #1.
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