Cabot Corporation (CBT)

Jun 13, 2025

∙ Paid

Background

Cabot Corporation is a leading global chemical and performance materials company headquartered in Boston, MA.
The company operates through two segments: Reinforcement Materials which includes reinforcing carbons and composites for tires and other applications, and Performance Chemicals which provides specialty carbons and conductive additives for the automotive, electronics and energy sectors.
CBT 0.00%↑ has current market cap of just over $4B and over the past decade has returned about 9% per year; however, in the last 5 years the stock has a CAGR of 18.7%.
Source: FinChat.io

Let’s take a look at some important financial metrics and assess the company’s performance.

The RPS for Cabot grew nicely between FY16 and FY19 before Covid caused a decline of nearly 19%.
Overall the revenue per share has grown at a clip of about 5.5% over the past decade.
CBT 0.00%↑ does have a share buyback program and in the past ten years, the company has reduced their total shares outstanding by an average of 1.67% annually.

The gross profit margin for Cabot has shown a general upward trend from FY15 to FY24, increasing from 20.7% to 24.3%.
The margin experienced a notable dip to 19.1% in FY20, the lowest point in the period, before recovering and stabilizing above 20% in subsequent years.
The highest gross profit margin was 25.2% in FY 2016, and in recent years this metric has crept closer to that mark.

The return on invested capital has shown significant growth, from 7.7% in FY15 to 17.7% in FY24.
After the peak in 2020, the ROIC stabilized between 13% and 20.6% from FY21 to FY23, before slightly increasing to 17.7% in FY 2024.

CBT 0.00%↑ currently yields about 2.35% and in the past month raised its dividend 5%.
The dividend has grown by 88% over the past decade, or about 7.3% annually.
The payout ratio has fluctuated some but is generally low and should allow management to continue raising its dividend for the foreseeable future.

The company has faced difficulties from increased Asian imports and tariff threats, particularly impacting margins in the Reinforcement Materials segment, as evidenced by lower production levels at tire customers in the Americas due to higher tire imports from Asia, which was highlighted in their Q1 2025 earnings call; this challenge is compounded by potential tariff uncertainties that could further disrupt pricing and demand dynamics in key markets.
Similarly, analysts have pointed to regulatory developments, such as environmental compliance costs, with the company noting increased expenses related to enhanced environmental regulations and compliance investments, which could strain financial performance, especially as these costs are reflected in recent price adjustments to offset inflationary and regulatory pressures.

Cabot Corporation reported a diluted earnings per share of $1.69 and an adjusted EPS of $1.90 for Q2 2025, marking a 7% increase in adjusted EPS compared to the same quarter in the prior year.
The Reinforcement Materials segment delivered an EBIT of $131 million, down 12% year-over-year due to a weaker global demand environment, particularly in tire markets.
The Performance Chemicals segment saw a 61% year-over-year increase in EBIT, driven by higher volumes, especially in fumed metal oxides related to construction and semiconductor applications.
Despite strong Q2 results, the full-year 2025 adjusted EPS guidance was revised to a range of $7.15 to $7.50, reflecting uncertainties from recent tariff announcements impacting demand.