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Cabot Corporation (NYSE:CBT): Has Recent Earnings Growth Beaten Long-Term Trend?

Simply Wall St

After reading Cabot Corporation’s (NYSE:CBT) most recent earnings announcement (31 December 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Cabot’s performance has been impacted by industry movements. In this article I briefly touch on my key findings.

Check out our latest analysis for Cabot

Did CBT’s recent earnings growth beat the long-term trend and the industry?

CBT’s trailing twelve-month earnings (from 31 December 2018) of US$77m has jumped 12% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -10%, indicating the rate at which CBT is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely due to industry tailwinds, or if Cabot has seen some company-specific growth.

NYSE:CBT Income Statement, March 14th 2019

In terms of returns from investment, Cabot has fallen short of achieving a 20% return on equity (ROE), recording 9.0% instead. Furthermore, its return on assets (ROA) of 3.8% is below the US Chemicals industry of 7.8%, indicating Cabot’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Cabot’s debt level, has increased over the past 3 years from 11% to 17%.

What does this mean?

Cabot’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Cabot has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Cabot to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CBT’s future growth? Take a look at our free research report of analyst consensus for CBT’s outlook.
  2. Financial Health: Are CBT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.