On Tuesday, Mizuho Securities adjusted its outlook on shares of Cabot Corporation (NYSE:CBT), a global specialty chemicals and performance materials company. The firm lowered its price target to $103.00 from the previous $109.00 while maintaining an Outperform rating on the stock.
The adjustment follows Cabot Corp 's guidance for its September quarter 2024 earnings per share (EPS) midpoint of $1.80, which compares favorably to the Morgan Stanley (NYSE:MS) USA estimate and Bloomberg consensus of $1.75 and $1.73, respectively.
The company reported a 12% year-over-year increase in adjusted EBITDA for the June quarter 2024, reaching $211 million, exceeding the $200 million and $202 million estimates from Morgan Stanley USA and the consensus.
The company's performance during a period of temporary curtailments in Mexico due to drought conditions, which have now ended, was noted.
The CEO of Cabot highlighted the "continued strength of [rubber] Reinforcement Materials." Additionally, the segment of Performance Chemicals was mentioned for its "improved volume & mix," particularly in "high-value applications such as automotive & semiconductors," which are returning "to more normalized levels."
Cabot Corp's financial results and outlook echo similar sentiments expressed by Orion S.A., a competitor in the field of Reinforcement Blacks and Specialty Carbons. Looking ahead, Cabot's Chief Financial Officer is slated to participate in the upcoming Mizuho Industrials & Chemicals Conference on August 14, where the company will join 14 other material firms and a similar industrial lineup to discuss industry trends and corporate strategies.
In other recent news, Cabot Corporation reported a strong second quarter in fiscal year 2024.
The specialty chemicals and performance materials company saw a noteworthy 34% year-over-year increase in adjusted earnings per share (EPS), reaching $1.78. This was driven by a 22% increase in EBIT for the Reinforcement Materials segment and an 11% rise in EBIT for Performance Chemicals. The company's robust operating cash flow of $176 million enabled a return of $47 million to shareholders through dividends and share repurchases.
Cabot Corporation has also raised its quarterly dividend by 8% and projects a positive outlook for the fiscal year 2024, with adjusted EPS expected to range between $6.65 and $6.85. Other recent developments include a $5 million grant awarded by the U.S. Department of Energy for fuel cell development.
Despite a decline in volumes in the Americas and a flat North American market expectation, the company maintains a positive outlook, particularly for the Reinforcement Materials segment. Analysts from firms like McLaughlin and Keohane anticipate volume improvement and reduced inventory impact, potentially restoring margins to Q1 levels.
InvestingPro Insights
Amid the recent performance evaluation of Cabot Corporation (NYSE:CBT) by Mizuho Securities, InvestingPro provides additional insights that could be valuable for investors. With a market capitalization of $4.81 billion and a P/E ratio that has recently adjusted to a competitive 10.31, Cabot stands out in the specialty chemicals sector. The company's stock has experienced volatility with a one-week total return of -12.37%, which might be seen as a buying opportunity considering the low P/E ratio relative to near-term earnings growth.
InvestingPro Tips highlight that management's aggressive share buybacks and a high shareholder yield could signal confidence in the company's financial health. Additionally, Cabot's commendable track record of raising its dividend for 12 consecutive years, coupled with 54 years of maintained dividend payments, underscores its commitment to returning value to shareholders. The company's resilience is further reflected in its strong return over the last five years, which is an encouraging metric for long-term investors.
For those seeking a deeper dive into Cabot Corporation's financials and strategic positioning, InvestingPro offers additional tips and a comprehensive analysis, available for investors looking to make informed decisions based on the latest data.
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