Strength Seen in Cabot (CBT): Can Its 6.1% Jump Turn into More Strength?

·2-min read

Cabot (CBT) shares soared 6.1% in the last trading session to close at $60.91. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6% gain over the past four weeks.

Cabot’s shares are heading higher following its forecast-topping fiscal second-quarter results. Its adjusted earnings per share of $1.38 topped the Zacks Consensus Estimate of 97 cents. Net sales rose around 19% year over year to $842 million and also beat the Zacks Consensus Estimate of $745.6 million.

The company saw strength in volumes and favorable pricing in the Reinforcement Materials segment in the quarter. Cabot expects continued demand strength across all its segments in the second half of fiscal 2021.

Price and Consensus

Price Consensus Chart for CBT
Price Consensus Chart for CBT

This chemical company is expected to post quarterly earnings of $0.94 per share in its upcoming report, which represents a year-over-year change of +1442.9%. Revenues are expected to be $732.65 million, up 41.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Cabot, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CBT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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