Yahoo Finance Cabot's (CBT) Earnings Top Estimates in Q2, Revenues Lag
Cabot Corporation CBT 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.
CBT 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.
Cabot Corporation Price, Consensus and EPS Surprise
Cabot Corporation price-consensus-eps-surprise-chart | Cabot Corporation Quote
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 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, CBT noted. The company now expects adjusted earnings per share for fiscal 2023 in the range of $6.10-$6.50.
Price Performance
Shares of Cabot are up 1.7% in the past year compared with a 5.7% decline of the industry.
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Zacks Rank & Other Key Picks
Cabot currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, PPG Industries, Inc. PPG and Linde plc LIN.
Steel Dynamics currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 24.3% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.7%, on average. STLD has gained around 31% in a year.
PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 12% in a year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 19% in the past year.
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