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1. Company Snapshot

1.a. Company Description

Cabot Corporation operates as a specialty chemicals and performance materials company.It operates through three segments: Reinforcement Materials, Performance Chemicals, and Purification Solutions.The company offers reinforcing carbons used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites.


It also provides specialty carbons used in inks, coatings, plastics, adhesives, toners, batteries, and displays applications; masterbatch and conductive compound products for use in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; inkjet colorants used in the inkjet printing applications; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; fumed alumina used in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries; and aerogel, a hydrophobic, silica-based particle for use in various thermal insulation and specialty chemical applications.In addition, the company offers activated carbon products used for the purification of water, air, food and beverages, pharmaceuticals, and other liquids and gases; and activated carbon solutions for activated carbon injection in coal-fired utilities, mobile water filter units, and carbon reactivation services.The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.


Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.

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1.b. Last Insights on CBT

Cabot Corporation's recent performance was negatively impacted by weaker demand and volumes, which weighed on sales, leading to a miss in Q4 earnings estimates. The company's net sales declined 10% year-over-year to $899 million, and net income attributable to Cabot Corporation decreased significantly. Despite a challenging macroeconomic backdrop, Cabot achieved 3% Adjusted EPS growth in fiscal year 2025. The company also announced a quarterly dividend of $0.45 per share and appointed Robert Rist as Vice President of Investor Relations and Corporate Planning. Additionally, Cabot's LITX 95F conductive carbon was named one of the "Top 10 Exhibits of 2025" at CIIE.

1.c. Company Highlights

2. Cabot's FY2025 Earnings: A Resilient Performance Amidst Challenges

Cabot reported a record adjusted earnings per share of $7.25 for FY2025, representing a 3% year-over-year increase. The company's cash flow results were also strong, with operating cash flow of $665 million and free cash flow of $391 million. In the fourth quarter, adjusted EPS was $1.70, slightly below the consensus estimate of $1.72. Revenue growth is expected to be negative at -2.7% next year, according to analysts' estimates. The company's P/E Ratio stands at 7.74, indicating a relatively low valuation multiple, while the EV/EBITDA ratio is 5.23, suggesting a reasonable enterprise value relative to its EBITDA.

Publication Date: Nov -08

📋 Highlights
  • Record Adjusted EPS:: Achieved $7.25 in FY 2025, a 3% increase year-over-year.
  • Strong Cash Flow:: Generated $665 million in operating cash flow and $391 million in free cash flow.
  • Battery Materials Growth:: Total contribution margin rose 20% YoY, driven by new conductive carbon product launches.
  • 2026 Outlook Caution:: Expect adjusted EPS between $6–$7, reflecting declining auto production and competitive pressures.
  • Capital Allocation Priorities:: $100–$200 million allocated to share repurchases amid $1.5 billion liquidity.

Segment Performance

The Performance Chemicals segment demonstrated resilience, with the Battery Materials business growing total contribution margin by 20% year-over-year. The company has launched a new conductive carbon product for lithium-ion batteries and continues to experience strong volume growth in its high-performance conductive additive blends. However, the Reinforcement Materials segment faced challenges, with lower EBIT driven by decreased volumes and increased competitive intensity in Asia.

Outlook and Guidance

Cabot expects a sequential decrease in EBIT of approximately $15 million to $20 million in the first quarter of FY2026, driven by lower volumes in the Americas and Europe. The company anticipates adjusted EPS to decline from FY2025 levels, ranging between $6 and $7. Despite the near-term challenges, Cabot remains optimistic about its long-term prospects, driven by the growth of the lithium-ion battery market, which is expected to grow at a compound annual rate of approximately 20% over the next three years.

Valuation and Dividend Yield

The company's valuation metrics appear reasonable, with a P/B Ratio of 2.13 and a Dividend Yield of 2.86%. The Free Cash Flow Yield is 10.64%, indicating a strong ability to generate cash. Cabot's ROIC is 15.62%, and ROE is 29.52%, demonstrating a high return on invested capital and equity. The Net Debt / EBITDA ratio is 1.2, indicating a manageable debt burden.

Operational Focus

Cabot is focused on navigating the current uncertainty by leveraging its strengths in operational and commercial excellence, optimizing its global assets, and maintaining a disciplined capital allocation strategy. The company expects cash flow and liquidity to remain strong, and its investment-grade balance sheet provides strategic flexibility to execute its "Creating for Tomorrow" strategy.

3. NewsRoom

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Ballast Asset Management LP Buys Shares of 28,532 Cabot Corporation $CBT

Dec -01

Source: defenseworld.net

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Is the Options Market Predicting a Spike in Cabot Stock?

Nov -28

Source: zacks.com

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Cabot Corporation Announces Reinforcement Materials Segment Executive Transition

Nov -21

Source: globenewswire.com

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Cabot Corporation's LITX® 95F Conductive Carbon Named One of the “Top 10 Exhibits of 2025” at CIIE

Nov -18

Source: globenewswire.com

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Cabot Corporation Board Declares Dividend

Nov -13

Source: globenewswire.com

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Is It Time To Buy Cabot Stock?

Nov -06

Source: forbes.com

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Cabot Wealth Management Inc. Increases Stock Holdings in Meta Platforms, Inc. $META

Nov -06

Source: defenseworld.net

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Cabot's Q4 Earnings and Sales Miss Estimates, Decline Y/Y

Nov -05

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.56%)

6. Segments

Reinforcement Materials

Expected Growth: 3.5%

Cabot Corporation's Reinforcement Materials segment growth of 3.5% is driven by increasing demand for energy-efficient tires, growth in the global automotive market, and rising adoption of electric vehicles. Additionally, the segment benefits from Cabot's strong market position, innovative product offerings, and strategic partnerships with leading tire manufacturers.

Performance Chemicals

Expected Growth: 3.8%

Cabot Corporation's Performance Chemicals segment growth of 3.8% is driven by increasing demand for specialty additives in the automotive and construction industries, as well as growing adoption of sustainable and energy-efficient solutions. Additionally, strategic investments in research and development, and expansion into emerging markets, have contributed to the segment's growth.

Unallocated and Other

Expected Growth: 2.5%

Cabot Corporation's Unallocated and Other segment growth of 2.5% is driven by increased demand for specialty chemicals and additives in the automotive and construction industries, as well as cost savings initiatives and strategic pricing actions.

7. Detailed Products

Reinforcement Materials

Carbon black, silica, and other reinforcing materials used in tires, rubber, and plastics

Performance Materials

Specialty carbons, fumed silica, and alumina used in coatings, inks, and plastics

Purification Solutions

Activated carbon, zeolites, and other materials used for air and water purification

Specialty Carbons

High-performance carbons used in energy storage, electronics, and other applications

Metal Oxides

Alumina, silica, and other metal oxides used in ceramics, catalysts, and other applications

8. Cabot Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Cabot Corporation is medium due to the availability of alternative products from competitors, but the company's strong brand reputation and product quality help to mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low for Cabot Corporation due to the company's strong relationships with its customers and its ability to provide customized solutions that meet their specific needs.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Cabot Corporation due to the company's dependence on a few key suppliers for certain raw materials, but the company's strong relationships with its suppliers help to mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low for Cabot Corporation due to the high barriers to entry in the specialty chemicals industry, including the need for significant capital investment and technical expertise.

Intensity Of Rivalry

The intensity of rivalry is high for Cabot Corporation due to the competitive nature of the specialty chemicals industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 50.24%
Debt Cost 6.64%
Equity Weight 49.76%
Equity Cost 10.27%
WACC 8.45%
Leverage 100.95%

11. Quality Control: Cabot Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
NewMarket

A-Score: 6.7/10

Value: 4.5

Growth: 7.2

Quality: 7.2

Yield: 3.0

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Cabot

A-Score: 5.5/10

Value: 7.1

Growth: 6.4

Quality: 6.0

Yield: 5.0

Momentum: 1.0

Volatility: 7.7

1-Year Total Return ->

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RPM International

A-Score: 5.2/10

Value: 3.6

Growth: 6.6

Quality: 5.7

Yield: 4.0

Momentum: 3.0

Volatility: 8.7

1-Year Total Return ->

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Balchem

A-Score: 4.7/10

Value: 1.9

Growth: 5.6

Quality: 7.5

Yield: 1.0

Momentum: 2.5

Volatility: 9.7

1-Year Total Return ->

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Innospec

A-Score: 4.3/10

Value: 3.4

Growth: 4.1

Quality: 5.4

Yield: 3.0

Momentum: 1.0

Volatility: 9.0

1-Year Total Return ->

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Olin

A-Score: 3.7/10

Value: 5.5

Growth: 4.4

Quality: 2.0

Yield: 6.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

65.33$

Current Price

65.33$

Potential

-0.00%

Expected Cash-Flows