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what it is
Cabot makes carbon black, fumed silica, and drilling-fluid chemicals for industrial customers.
how it gets paid
Last year Cabot made $3.7B in revenue. Reinforcement Materials was the main engine at $2.2B, or 60% of sales.
why growth slowed
Revenue fell 7.0% last year. Revenue fell 11.0% vs. prior year, and EPS fell 18.0%.
what just happened
$849M in revenue and $1.37 in EPS were both lower than a year ago.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
65/100 earnings predictability — reasonably predictable
10.1x trailing p/e — the market's not buying it — or you found a deal
2.5% dividend yield — cash in your pocket every quarter
18.5% return on capital — nothing to write home about
xvary composite: 60/100 — average
What they do
Cabot makes carbon black, fumed silica, and drilling-fluid chemicals for industrial customers.
You buy Cabot when your tires, plastics, or adhesives need reinforcement. It has 4,100 employees and sticky industrial supply chains, so leaving is work, not a click. The contrast is blunt: 10.1x earnings versus 18.5% return on capital, which is profit on the money tied up in the business.
How they make money
$3.7B
annual revenue · their business grew -7.0% last year
Reinforcement Materials
$2.2B
12.6%
Performance Chemicals
$1.0B
4.3%
Cesium Formate and Other
$0.5B
0.0%
The products that matter
industrial materials production
Carbon Black & Fumed Silica
$3.7B revenue
the snapshot data assigns 65% of sales to this bucket. if that mix is directionally right, this is the engine that decides whether $3.7B in revenue turns into a 9.5% net margin or not.
core
mineral processing services
Processing Services
$740M revenue · 20% of sales
$740M is about one-fifth of company sales. it is not the whole story, but if margins here slip, consolidated profitability follows.
margin watch
mineral rights royalties
Royalties
$555M revenue · support line
$555M makes this smaller than the core materials business, but it still matters when the rest of the portfolio is under pressure. thin data here means you should treat this as support, not the thesis.
secondary driver
Key numbers
$3.7B
sales
That is the whole top line. It is big enough to matter, small enough that one bad quarter can bend the year.
10.1x
trailing p/e
That is the price tag on trailing profit. You pay $10.10 for each $1 of earnings.
18.5%
return on capital
That is profit on the money tied up in the business. It is high enough to explain why the stock looks cheap.
2.5%
dividend yield
That is cash back in your pocket. It is the steady part of a stock story that still depends on sales holding up.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 60 / 100
- long-term debt $856M (18% of capital)
- net profit margin 9.8% — keeps 10 cents of every dollar in revenue
- return on equity 29% — $0.29 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in CBT 3 years ago → it's now worth $10,680.
The index would have given you $14,770.
source: institutional data · total return
What just happened
missed estimates
$849M in revenue and $1.37 in EPS were both lower than a year ago.
Revenue fell 11.0% vs. prior year, and EPS fell 18.0%. Gross margin was 24.9%, or about a quarter of sales left after direct costs.
$849M
revenue
$1.37
eps
24.9%
gross margin
revenue
Revenue was the tell. $849M was down 11.0%, so the demand weakness showed up before the full-year estimate did.
-
the company posted fourth-quarter earnings of $1.70 a share, on par with our estimate yet 6% below the year-ago figure, on a 10% decrease in the top line.
-
the reinforcement materials segment reported a 12.6% drop in sales, as volumes in the americas were impacted by lower production levels at its tire customers, given the increased levels of tire imports from asia into the region.
-
what’s more, performance chemicals’ sales fell 4.3%, due to a 5% decrease in volumes, largely the result of lower demand in europe.and leadership does not see signs of improvement in the current environment, particularly in reference to the impact of elevated asian tire imports into the americas.
-
hence, we have pared our earnings estimate for fiscal 2026 by $1.30 a share, to $6.50, on approximately a 4% drop in sales.
-
yet, investors seem relatively optimistic about the company’s long-term prospects.
source: company earnings report, 2026
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What could go wrong
the top threat is end-market demand for carbon black, silica, and industrial materials.
high
industrial demand stays weak
Annual revenue already fell 7.0%, and the current quarter estimate calls for another 11% drop. This business is tied to industrial volumes whether you like it or not.
another high-single-digit decline from the $3.7B revenue base would mean hundreds of millions less sales to absorb fixed costs.
med
margin compression
Gross margin is 24.9% and net margin is 9.5%. When volumes soften, cost absorption gets worse fast.
a 1-point hit to net margin on $3.7B of revenue is roughly $37M less profit.
med
the stock stays cheap
A 10.1x trailing P/E looks attractive, but bottom-5% chart momentum, three years of underperformance, and three straight quarters of institutional selling say the market wants proof first.
even if earnings hold near the $6.50 estimate, a flat 10x multiple keeps the stock close to where it is now.
If sales keep falling and gross margin cannot hold near 24.9%, this stays a 10x earnings stock for a reason.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
revenue stabilization
Annual revenue fell 7.0%, and the current quarter estimate is $0.8B, down 11% from a year ago. you need that decline to slow.
risk
gross margin discipline
24.9% gross margin is the number doing the heavy lifting. if it slips while revenue is falling, earnings pressure follows.
trend
institutional flow
Institutions were net sellers for 3 straight quarters, with 160 buyers versus 194 sellers in 3Q2025. you want that tide to stop going out.
calendar
estimate revisions
Watch whether the $1.70 quarterly EPS estimate and $6.50 full-year EPS view hold. cuts matter more than beats when the stock is already cheap.
Analyst rankings
short-term outlook
average
momentum score 3 — middle of the pack. in human-speak, analysts do not see a clear near-term catalyst.
risk profile
average
stability score 3 — safer than the wild stuff, not a shelter in a downturn.
chart momentum
bottom 5%
technical score 5 — the lowest rating. this is what weak price action looks like on paper.
earnings predictability
65 / 100
good enough to model, not good enough to sleepwalk through. you should expect a few surprises.
source: institutional data
Institutional activity
institutions have been net selling for 3 consecutive quarters — 160 buyers vs. 194 sellers in 3q2025. total institutional holdings: 50.6M shares. net selling for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$59
$113
$73
current price
$86
target midpoint · +18% from current · 3-5yr high: $160 (+120% · 23% ann'l return)
Want the deeper analysis?
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