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.
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.
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:
- 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.
- 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.
- 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.
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