Company Description
Cabot supplies CMP polishing slurries and pads for the semiconductor industry. The products allow semi makers to build smaller, faster and more complex devices.
A Banner Year
On Oct 28 Cabot announced its fiscal 2010, and fourth-quarter, results. Annual revenue had jumped 40% last year to a record high of $408 million. Cash from operations came in at $88.4 million and company finished up with $254 million in cash and no debt.
Earnings per share came out to 66 cents for the quarter, beating expectations by a dime. This marked the fifth surprise in the past 6 quarters.
Management went on to describe the results as a "banner year" and that Cabot is well positioned to take advantage of the ongoing "robust global industry environment."
Estimates Jump
Analysts polled by Zacks are expecting earnings for fiscal 2011 to come in at $2.47, which is up 31 cents since the earnings release. Next year's forecasts are coming in at $2.87 on average, up 35 cents.
Now some of this increase is also due to a subsequently announced $125 million stock repurchase plan. That news came out in late November which spurred a round of upward revisions.
Now, I would rather see that cash spent on new projects, but this is a good sign of the financial strength of the company. All in all, analysts are now expecting annual growth rates of 16% in each of the next 2 years.
The Chart
Shares of CCMP have been up considerably over the past 3 months, but continue to inch higher. Also, at 17 times forward estimates they are not overvalued compared to the peer group.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
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