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Cabot (CBT) Wraps Up Acquisition of Tokai Carbon Black Plant

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Cabot Corporation CBT recently completed the buyout of Tokai Carbon (Tianjin) Co., Ltd from Tokai Carbon Group.

The buyout boosts Cabot’s manufacturing capacity to support the growth of its Battery Materials product line, while continuing to serve existing carbon black customers.

The upswing in electric vehicles has sparked rapid development in lithium-ion batteries, leading to higher demand for conductive carbon black additives—one of the key materials. The Tokai site has a present annual capacity of 50,000 metric tons of carbon black and Cabot’s planned investment will add more steam to the capabilities of battery-grade production.

Per the terms and conditions, Cabot will operate the plant and plans to continue supplying to the current customers while upgrading the technology. The advancement in manufacturing and environmental equipment will empower the facility to produce carbon black for battery materials and meet all the necessary environmental standards.

Cabot stated that this acquisition directly aligns with its strategy to invest in advantaged growth and develop innovative products and processes that pave the path to a more sustainable future. It is committed to investing in and connecting the capabilities across its carbon black network to help customers ramp up innovation, while leading in performance and sustainability, the company noted.

Shares of Cabot have gained 49.9% in the past year compared with a 0.1% rise of the industry.

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Cabot, in its last earnings call, stated that it expects continued strong end-market demand and benefits from growth investments. Looking ahead to the rest of 2022, Reinforcement Materials is expected to benefit from customer agreements in the year. Growth in demand is anticipated for the Performance Chemicals segment along with strength in battery materials and inkjet packaging. The company is on track with its long-term guidance to generate more than $1 billion during the next three years and expects a strong free cash flow to fund high-growth investments. It is also committed to returning capital to shareholders through dividends and share repurchases.

Based on the positive outlook and strong fiscal first-quarter performance, it has raised its adjusted earnings per share outlook for fiscal 2022 to the range of $5.50-$5.90 from the previous view of $5.20-$5.60.

For the second quarter of fiscal 2022, it also expects demand improvement across all its key product lines and a boost in profitability.

Cabot Corporation Price and Consensus

Cabot Corporation Price and Consensus
Cabot Corporation Price and Consensus

Cabot Corporation price-consensus-chart | Cabot Corporation Quote

Zacks Rank & Other Key Picks

Cabot currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are Allegheny Technologies Incorporated ATI, The Mosaic Company MOS and AdvanSix Inc. ASIX.

Allegheny, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 661.5% for the current year. The Zacks Consensus Estimate for ATI's earnings for the current year has been revised 45.6% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allegheny beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 127.2%. ATI has rallied around 34.1% over a year.

Mosaic, sporting a Zacks Rank #1, has a projected earnings growth rate of 95% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 15.5% upward in the past 60 days.

Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missing once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 81.8% in a year.

AdvanSix has a projected earnings growth rate of 17.3% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 12.4% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 12.4%. ASIX has surged 51.8% in a year. The company sports a Zacks Rank #1.


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