Why Cabot's Shares Dropped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty chemicals maker Cabot fell 10% in early trading, after the company reported earnings.

So what: Revenue rose 7.6%, to $820 million, but net income dropped from $46 million a year ago, to $20 million. On an adjusted basis, the company earned $0.66 per share, but that fell well below the $0.76 analysts expected.

Now what: Cabot missed both top and bottom line expectations, something investors never like. Management was also especially cautious given weakness in many of the company's end markets. I don't see any great catalyst right now, and would wait to see how the next couple of quarters play out before jumping into a stock that's starting to look like a value trap.

Interested in more info on Cabot? Add it to your watchlist by clicking here.

The article Why Cabot's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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