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BOSTON - Cabot Corporation (NYSE: NYSE:CBT), a global specialty chemicals company, has entered into award negotiations for a grant up to $50 million from the U.S. Department of Energy (DOE). This grant, allocated from the Bipartisan Infrastructure Law, is set to support the creation of a new manufacturing facility dedicated to producing battery-grade carbon nanotubes (CNTs) and conductive additive dispersions. The facility will be the first of its kind in the United States, aiming to bolster the domestic lithium-ion battery supply chain for electric vehicles (EVs) and the electrical grid.
The grant is expected to fund nearly 30 percent of the projected $181 million investment needed for this initiative. The planned facility will be established in Wayne County, Michigan, by repurposing a former automotive site. The project is anticipated to generate hundreds of new jobs, both in construction and full-time manufacturing roles.
Sean Keohane, president and CEO of Cabot Corporation, expressed gratitude for the DOE's selection and emphasized the project's significance in enhancing the U.S. battery supply chain. He highlighted Cabot's role as a materials innovator and its contributions to the energy transition, including its extensive experience in supplying conductive additives to the battery industry.
Cabot's history spans 140 years in the automotive supply chain, with over 15 years of experience in battery material production. The company's established relationships with leading battery manufacturers position it to offer localized solutions tailored to specific battery chemistries, including those for domestic EV makers.
In addition to CNTs and conductive dispersions, Cabot's portfolio includes a range of advanced materials such as aerogels for thermal management, metal oxides for cathode durability, and advanced carbons for fuel cell optimization.
The DOE's Office of Manufacturing and Energy Supply Chains (MESC) is responsible for catalyzing investments in America's energy future, focusing on manufacturing capacity and workforce development to support the country's transition to a resilient, equitable energy future.
This news is based on a press release statement from Cabot Corporation.
In other recent news, Cabot Corporation has seen significant strides in their financial performance. The company's recent third-quarter earnings release showcased a 10% earnings per share (EPS) beat, as noted by Deutsche Bank, which reiterated a Hold rating on Cabot Corp 's stock. The company's fiscal fourth-quarter EPS guidance midpoint also exceeded consensus estimates by 5%.
Cabot Corp's robust performance was particularly noticeable in the Performance Chemicals segment, where a 9% year-over-year increase in volumes and a favorable product mix led to a significant rise in earnings before interest and taxes (EBIT). The company's Reinforcement Materials segment also benefited from favorable pricing and product mix.
Furthermore, Cabot Corporation has raised its full-year adjusted EPS outlook to $7 to $7.10, up from the prior $6.65 to $6.85 range. This adjustment reflects the company's strong commercial and operational execution. Despite economic uncertainties, Cabot anticipates continued strong demand in key markets and aims to generate over $1 billion in cumulative discretionary free cash flow between fiscal years 2022 and 2024.
Looking ahead, Cabot remains optimistic about the Reinforcement Materials market, with confidence bolstered by the ban on Russian and Belarusian carbon black exports to Europe, the resilience of the tire replacement market, and tight supply/demand dynamics in the Americas. These are among the recent developments that investors should keep an eye on.
InvestingPro Insights
As Cabot Corporation (NYSE: CBT) positions itself at the forefront of the U.S. battery supply chain with its planned manufacturing facility, investors are keeping a close eye on the company's financial health and market performance. According to InvestingPro data, Cabot Corporation boasts a market capitalization of approximately $6.1 billion, reflecting its significant presence in the specialty chemicals industry. The company's stock is trading near its 52-week high, with a price percentage of 99.6%, indicating strong investor confidence in its current and future prospects.
The company's commitment to shareholder returns is evident, as it has raised its dividend for 12 consecutive years and maintained dividend payments for 54 consecutive years. This consistent return to shareholders is a testament to Cabot's financial stability and disciplined approach to capital allocation. For detailed insights on Cabot's financial performance and strategic initiatives, investors can explore additional InvestingPro Tips by visiting: https://www.investing.com/pro/CBT, where 11 more tips are available.
InvestingPro data also highlights Cabot's prudent financial management, with a P/E ratio of 13.08, which is considered low relative to its near-term earnings growth. This suggests that the stock may be undervalued given its earnings potential. Moreover, the company's liquid assets exceed its short-term obligations, providing it with a solid liquidity position to support ongoing operations and strategic investments like the new battery-grade carbon nanotubes manufacturing facility.
With a PEG ratio of 0.21 for the last twelve months as of Q3 2024, Cabot Corporation appears to offer growth at a reasonable price, which could be an attractive point for investors looking for value in the chemicals sector. These financial metrics and strategic endeavors underscore Cabot's robust position in the market as it continues to innovate and expand its product offerings in the evolving energy sector.
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