Why Is Cabot (CBT) Down 1.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Cabot (CBT). Shares have lost about 1.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Cabot Corporation before we dive into how investors and analysts have reacted as of late.

Cabot’s Q3 Earnings Beat Estimates on Performance Chemicals Strength

Cabot posted third-quarter fiscal 2026 (ended June 30, 2026) adjusted earnings of $1.67 per share, down 12.1% year over year but ahead of the Zacks Consensus Estimate of $1.66.

Revenues increased 6.4% year over year to $982 million and surpassed the consensus mark of $914.5 million by 7.4%.

Performance Chemicals delivered stronger profitability, supported by higher volumes and gross profit per ton, while Reinforcement Materials faced pressure from lower gross profit per ton.

Segmental Highlights

Reinforcement Materials sales increased 4.5% year over year to $599 million from $573 million. It beat the Zacks Consensus Estimate of $543 million. Segment EBIT declined to $97 million from $128 million in the prior-year period. The decrease primarily reflected lower gross profit per ton due to the outcomes of calendar 2026 customer agreements, partially offset by higher volumes and a more favorable regional product mix.

Reinforcement Materials volumes increased 5% globally. Asia Pacific volumes rose 10%, and Americas volumes increased 4%, while Europe, Middle East and Africa volumes declined 4%. Growth also benefited from additional capacity in Indonesia and the company's acquisition in Mexico.

Performance Chemicals sales advanced 9.7% year over year to $351 million from $320 million. It surpassed the Zacks Consensus Estimate of $339 million. Segment EBIT increased to $68 million from $57 million, supported by higher volumes and increased gross profit per ton.

Battery materials volumes benefited from stronger demand for electric vehicles and battery energy storage systems, as well as increased participation with leading global battery manufacturers. Fumed metal oxides volumes rose on growth in electronics applications. Higher gross profit per ton reflected price increases implemented ahead of rising raw material costs and a favorable product mix.

Financials

Cabot exited the third quarter of fiscal 2026 with cash and cash equivalents of $250 million. Cash provided by operating activities totaled $75 million during the quarter.

Capital expenditures were $38 million, while dividend payments totaled $24 million. The company ended the quarter with $1.3 billion of available liquidity and a net debt-to-EBITDA ratio of 1.4 times as of June 30, 2026. Free cash flow was $37 million, while discretionary free cash flow totaled $91 million.

Outlook

For fiscal 2026, Cabot tightened its adjusted earnings guidance to $6.15-$6.45 per share from the previous range of $6-$6.5. The company expects its full-year fiscal 2026 operating tax rate to be in the range of 28-30%.

Cabot also reaffirmed its expectation of approximately $40 million of EBITDA from its battery materials product line for fiscal 2026. The company is expanding global conductive additive capacity through targeted investments in the United States and China to support expected growth in global battery demand and broaden its participation with leading battery manufacturers.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 6.12% due to these changes.

VGM Scores

At this time, Cabot has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Cabot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Cabot belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, LyondellBasell (LYB), has gained 6.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

LyondellBasell reported revenues of $9.18 billion in the last reported quarter, representing a year-over-year change of +19.8%. EPS of $4.30 for the same period compares with $0.62 a year ago.

For the current quarter, LyondellBasell is expected to post earnings of $2.46 per share, indicating a change of +143.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -6.8% over the last 30 days.

LyondellBasell has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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This article originally published on Zacks Investment Research (zacks.com).

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