Cabot Beats on EPS but GAAP Results Lag (CBT)

Cabot Beats on EPS but GAAP Results Lag

Cabot (NYSE: CBT ) reported earnings Feb. 1. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), Cabot missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded slightly and GAAP earnings per share shrank significantly.

Margins contracted across the board.

Revenue details
Cabot tallied revenue of $762.0 million. The three analysts polled by S&P Capital IQ looked for a top line of $796.0 million. Sales were 1.2% higher than the prior-year quarter's $753.0 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.61. The six earnings estimates compiled by S&P Capital IQ predicted $0.56 per share on the same basis. GAAP EPS of $0.72 for Q1 were 36% lower than the prior-year quarter's $1.13 per share.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 18.8%, 260 basis points worse than the prior-year quarter. Operating margin was 8.0%, 280 basis points worse than the prior-year quarter. Net margin was 6.0%, 400 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $821.3 million. On the bottom line, the average EPS estimate is $0.76.

Next year's average estimate for revenue is $3.28 billion. The average EPS estimate is $2.91.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 67 members rating the stock outperform and five members rating it underperform. Among 25 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 24 give Cabot a green thumbs-up, and one gives it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Cabot is outperform, with an average price target of $40.83.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

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Report this Comment On February 14, 2012, at 5:36 AM, summertimeVA wrote:

If 40 USD is the target then it is trading 25% higher. After dividend payout it should drop. What happens to your 25% loss in capital if you buy today at 50 USD for dividend?
Buying this stock is good for dividend or long term investing?
My reasoning is the stock was trading at around 40 USD, 8 USD above it's October 2011 low of 32.49 USD and 12.11 USD below its April 2011 high of 52.11 USD.
They offer this special dividend which is NOT 100% from it's free cash flow but borrowed money and the stock GAPS up to 47.56 USD and then moves up to 50 USD (still below the April 2011 high) where it has been moving sideways since Dec 14th.
March 2nd is the payout and the stock should drop to close the GAP (in theory).
So if I bought the stock today for 50 USD and took the dividend then my capital would be locked up until the stock moved over 50 USD? This would depend on how much the stock dropped?
Ex. 10000 USD @ 50 USD= 200 shares
200 shares @ 15= 3000 USD (dividend)
200 shares @ 45.02 (fibonacci retracement 61.8%, upper GAP support) =9004 USD + 3000 USD (dividend) 12004 USD
200 shares @ 40 USD (fibonacci retracement 38.2%, lower GAP support) =8000 USD + 3000 USD (dividend) 11000 USD