Cabot Stock Delivers Strong Cash Yield – Upside Ahead?
Here is why we think Cabot (CBT) is worth a look.
- Cash Yield: Not many stocks offer free cash flow yield of 10.8%, but Cabot stock does
- Fundamentals: 3-Year average revenue growth of -2.5% and operating margin of 15.0% show reasonable fundamentals
- Valuation: CBT stock currently trading at 47% below 2Y high, 18% below 1M high, and at a PS lower than 3Y average.
Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, Cabot provides specialty chemicals and performance materials across reinforcement, performance chemicals, and purification solutions segments, serving global markets through distributors and sales representatives.
Love the CBT stock? Great. But don’t get too attached. Stocks crash. High Quality Portfolio lets you navigate that risk.
| CBT | S&P Median | |
|---|---|---|
| Sector | Materials | – |
| Industry | Diversified Chemicals | – |
| Free Cash Flow Yield | 10.8% | 4.1% |
| Revenue Growth LTM | -3.6% | 5.6% |
| Revenue Growth 3YAVG | -2.5% | 5.3% |
| Operating Margin LTM | 16.6% | 18.8% |
| Operating Margin 3YAVG | 15.0% | 18.2% |
| LTM Operating Margin Change | 1.3% | 0.2% |
| PE Ratio | 7.6 | 23.8 |
But do these numbers tell the full story? Read Buy or Sell CBT Stock to see if Cabot still has an edge that holds up under the hood.
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
The Point? The Market Can Notice, And Reward
The below statistics are from high FCF yield selection strategy between 12/31/2016 and 6/30/2025. The stats are calculated based on selections made monthly, and assuming that a stock once picked, can not be re-picked for next 180 days.
- Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 18% with 70% win rate.
But Consider The Risk
That said, CBT isn’t immune to big dips. It fell about 83% during the Global Financial Crisis and dropped 55% in the Covid sell-off. The Dot-Com crash and 2018 correction also hit hard, with losses around 37% and 43%. Even the more recent inflation shock caused a 25% pullback. Strong fundamentals matter, but when volatility spikes, this stock can take a major hit like many others.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CBT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.