Cabot (CBT) & Ferro (FOE) Financial Analysis

Cabot (NYSE: CBT) and Ferro (NYSE:FOE) are both basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitability, risk, earnings, valuation and institutional ownership.

Risk & Volatility

Cabot has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Ferro has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500.

Earnings and Valuation

This table compares Cabot and Ferro’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cabot $2.72 billion 1.46 $241.00 million $3.81 16.85
Ferro $1.15 billion 1.59 -$20.81 million $0.52 41.65

Cabot has higher revenue and earnings than Ferro. Cabot is trading at a lower price-to-earnings ratio than Ferro, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

84.0% of Cabot shares are owned by institutional investors. Comparatively, 97.7% of Ferro shares are owned by institutional investors. 2.2% of Cabot shares are owned by insiders. Comparatively, 2.0% of Ferro shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Cabot pays an annual dividend of $1.26 per share and has a dividend yield of 2.0%. Ferro does not pay a dividend. Cabot pays out 33.1% of its earnings in the form of a dividend. Cabot has raised its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Cabot and Ferro, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cabot 0 2 5 0 2.71
Ferro 0 0 4 0 3.00

Cabot presently has a consensus price target of $69.80, indicating a potential upside of 8.76%. Ferro has a consensus price target of $23.00, indicating a potential upside of 6.19%. Given Cabot’s higher probable upside, research analysts plainly believe Cabot is more favorable than Ferro.

Profitability

This table compares Cabot and Ferro’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cabot 8.87% 15.11% 6.95%
Ferro 3.44% 35.77% 7.57%

Summary

Cabot beats Ferro on 9 of the 17 factors compared between the two stocks.

About Cabot

Cabot Corporation is a global specialty chemicals and performance materials company. The Company operates through four business segments: reinforcement materials, performance chemicals, purification solutions and specialty fluids. Reinforcement materials’ rubber grade carbon blacks are used to enhance the physical properties of the systems and applications in which they are incorporated. Its rubber blacks products are used in tires and industrial products. Performance Chemicals consists of two businesses: specialty carbons and formulations business, and metal oxides business. Purification Solutions’ activated carbon products are used for the purification of water, air and pharmaceuticals, among others, as either a colorant or a decolorizing agent in the production of food and beverage applications. Its specialty fluids segment produces and markets cesium formate as a drilling and completion fluid for use in high pressure and high temperature oil and gas well construction.

About Ferro

Ferro Corporation (Ferro) produces specialty materials that are sold to a range of manufacturers. The Company’s segments include Performance Coatings (metal and ceramic coatings), Performance Colors and Glass (glass coatings), and Color Solutions. Its Performance Coatings segment includes Tile Coating Systems and Porcelain Enamel. Its manufacturers make products for various end-use markets. The Company’s products fall into two general categories: functional coatings, which perform specific functions in the manufacturing processes and end products of its customers, and color solutions, which provide aesthetic and performance characteristics to its customers’ products. Its products are used in a range of product applications in markets, including appliances, automobiles, building and renovation, electronics, household furnishings, industrial products and packaging.

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