Why Is Cabot (CBT) Down 4.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Cabot (CBT). Shares have lost about 4.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Cabot Corporation before we dive into how investors and analysts have reacted as of late.

Cabot’s Q1 Earnings Beat Estimates, Sales Down Y/Y on Lower Volumes

Cabot’s recorded first-quarter fiscal 2026 (ended Dec. 31, 2025) earnings of $1.37 per share, down from the year-ago quarter's figure of $1.67.

Cabot posted adjusted earnings of $1.53 per share, down from the year-ago quarter figure of $1.76. However, adjusted earnings outpaced the Zacks Consensus Estimate of $1.40.

The company’s net sales in the quarter were $849 million, which missed the Zacks Consensus Estimate of $881.9 million. Net sales fell around 11.1% from the prior-year quarter.

Segment Highlights

Reinforcement Materials’ sales decreased around 14.9% year over year to $520 million in the reported quarter. It missed the Zacks Consensus Estimate of $549 million. Earnings before interest and tax (EBIT) in the segment were $102 million, down around 21.54% from the year-ago quarter. The decline in EBIT was primarily due to lower volumes in the Asia Pacific and the Americas.

In the reported quarter, sales in the Performance Chemicals division declined 3.5% year over year to $300 million. It also missed the Zacks Consensus Estimate of $304 million. EBIT witnessed an increase of approximately 6.7% to $48 million. The rise in EBIT was mainly due to a higher gross profit per ton from a favorable product mix and overall cost management and optimization efforts. This was partly offset by lower volumes due to weak demand in Europe.

Financials

The company concluded the first quarter of fiscal 2026 with a cash balance of $230 million. During the quarter, cash flows from operating activities were $126 million.

Capital expenditures for the fiscal first quarter totaled $69 million. During the fiscal first quarter, cash was also used to pay dividends of $24 million and $52 million for share repurchases.

Outlook

The company sees continued weakness in regional demand for Reinforcement Materials stemming from elevated Asian tire imports into Western markets. It expects a narrower adjusted EPS for the fiscal year to range between $6.00 and $6.50 compared to the previous expectation of $6.00 to $7.00. The fiscal 2026 outlook incorporates the ongoing outcome of negotiations in the tire customer agreements and competitive pressures within Reinforcement Materials.

In contrast, it expects Performance Chemicals to deliver earnings growth, supported by strength in Battery Materials and opportunities across infrastructure, alternative energy and consumer-focused applications. It also anticipates benefits from cost reductions, optimization actions and capacity rationalization.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -11.25% due to these changes.

VGM Scores

At this time, Cabot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cabot has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Cabot belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, LyondellBasell (LYB), has gained 8.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

LyondellBasell reported revenues of $7.09 billion in the last reported quarter, representing a year-over-year change of -25.3%. EPS of -$0.26 for the same period compares with $0.75 a year ago.

LyondellBasell is expected to post earnings of $0.34 per share for the current quarter, representing a year-over-year change of +3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.

LyondellBasell has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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