Cabot Corporation CBT issued an update on the impact of the coronavirus pandemic to its business. The company is following all local regulations and guidance issued by appropriate authorities. It is also restricting access to its facilities to critical personnel only.
The company stated that it will continue to serve customers globally and has contingency plans in place. It expects financial results for fiscal second quarter to be solid. Sales volume in China was affected during the quarter due to the coronavirus. However, demand was strong in the rest of the world during the quarter. Additionally, the company expressed concerns regarding the future demand for its products and is withdrawing the previous financial guidance for fiscal 2020.
The company continues to maintain a strong balance sheet. As of Dec 31, 2019, it has cash and cash equivalents of $173 million and total debt of $1.1 billion. It currently has borrowing availability of $1.1 billion under its revolving credit facilities.
Regarding cash flows, Cabot stated that it is aggressively managing net working capital, including an expected reduction from lower raw material costs and lower inventory levels in the fiscal third quarter. The company is also aligning capital allocation actions with the current environment. Further, it is assessing opportunities to lower its earlier plans for capital spending.
The previously announced buyout of Shenzhen Sanshun Nano New Materials is expected to close early April 2020. Additionally, Cabot has paused share repurchases in the near term but expects to maintain the dividend payout.
Cabot’s shares have dropped 38.8% in the past year compared with the industry’s decline of 52.1%.
Zacks Rank & Key Picks
Cabot currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are Newmont Corporation NEM, Franco-Nevada Corporation FNV and Novagold Resources Inc. NG, all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Newmont has an expected earnings growth rate of 97% for 2020. The company’s shares have gained 30.2% in the past year.
Franco-Nevada has an expected earnings growth rate of 24.7% for 2020. Its shares have returned 31.3% in the past year.
Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 89.7% in the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Newmont Goldcorp Corporation (NEM) : Free Stock Analysis Report
Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
Cabot Corporation (CBT) : Free Stock Analysis Report
Novagold Resources Inc. (NG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research