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CBT, Cabot

Chemicals capital-intensive Cyclical

Cabot is a global specialty chemicals and performance materials company headquartered in Boston, Massachusetts.

Our principal products are reinforcing and specialty carbons, specialty compounds, conductive additives, carbon nanotubes, fumed metal oxides, inkjet colorants, and aerogel.

We focus on creating particles, and formulations of those particles, with the composition, morphology, and surface functionalities to deliver the requisite performance to support our customers' existing and emerging applications.

Latest annual: FY2025 10-K

CBT · Cabot

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$3.7B

−7.0% YoY · 7% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $3.6B 5-yr avg $3.9B

Gross margin 25% 5-yr avg 23%

Operating margin 15.7% 5-yr avg 13.6%

ROIC 14% 5-yr avg 19%

Owner-earnings margin 14% 5-yr avg 8%

Free cash flow margin 12% 5-yr avg 6%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power.
What moves the needle: Gross margin has run about 23% and operating margin about 10% through the cycle, a thin spread that turns the result on volume and the cost of what it sells far more than on the price it sets. The margin is cyclical, swinging between 0.8% and 17% over the years, so the through-cycle figure carries more than any single year — and the balance sheet at the trough more than the peak. Inventory runs near 14% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. Read this kind of business on the spread and utilization. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run in the teens (median 15%, above 15% in 4 of 9 years). Owner earnings agree: roughly 8% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$2.4B	$2.7B	$3.2B	$3.3B	$2.6B	$3.4B	$4.3B	$3.9B	$4.0B	$3.7B	$3.6B	RevenueRevenue
24%	24%	24%	21%	19%	23%	20%	21%	24%	25%	25%	Gross marginGross mgn
11%	10%	10%	9%	11%	8%	6%	6%	7%	7%	7%	SG&A / revenueSG&A/rev
2%	2%	2%	2%	2%	2%	1%	1%	2%	2%	2%	R&D / revenueR&D/rev
$247M	$338M	$144M	$306M	$21M	$454M	$389M	$526M	$614M	$621M	$562M	Operating incomeOp. inc.
10.2%	12.4%	4.4%	9.2%	0.8%	13.3%	9.0%	13.4%	15.4%	16.7%	15.7%	Operating marginOp. mgn
$147M	$248M	($113M)	$157M	($238M)	$250M	$209M	$445M	$380M	$331M	$285M	Net incomeNet inc.
18%	12%	—	31%	—	33%	33%	-7%	23%	37%	40%	Effective tax rateTax rate
											Cash flow & returns
$392M	$348M	$298M	$363M	$377M	$257M	$100M	$595M	$692M	$665M	$671M	Operating cash flowOp. cash
$161M	$155M	$149M	$148M	$158M	$160M	$146M	$144M	$151M	$154M	$169M	DepreciationDeprec.
$67M	($71M)	$240M	$47M	$448M	($174M)	($278M)	($14M)	$136M	$156M	$200M	Working capital & otherWC & other
$112M	$147M	$229M	$224M	$200M	$195M	$211M	$244M	$241M	$274M	$239M	CapexCapex
4.6%	5.4%	7.1%	6.7%	7.7%	5.7%	4.9%	6.2%	6.0%	7.4%	6.7%	Capex / revenueCapex/rev
$280M	$201M	$149M	$215M	$219M	$62M	($46M)	$451M	$541M	$511M	$502M	Owner earningsOwner earn.
11.6%	7.4%	4.6%	6.4%	8.4%	1.8%	−1.1%	11.5%	13.5%	13.8%	14.0%	Owner earnings marginOE mgn
$280M	$201M	$69M	$139M	$177M	$62M	($111M)	$351M	$451M	$391M	$432M	Free cash flowFCF
11.6%	7.4%	2.1%	4.2%	6.8%	1.8%	−2.6%	8.9%	11.3%	10.5%	12.1%	Free cash flow marginFCF mgn
—	—	$64M	$3M	$92M	—	$9M	—	—	$27M	$27M	AcquisitionsAcquis.
$65M	$77M	$80M	$80M	$80M	$80M	$84M	$88M	$93M	$96M	$97M	Dividends paidDiv. paid
$45M	$61M	$142M	$173M	$44M	$3M	$53M	$98M	$172M	$168M	—	BuybacksBuybacks
10%	14%	4%	11%	—	16%	15%	25%	21%	16%	14%	ROICROIC
12%	16%	-10%	16%	-34%	26%	23%	35%	27%	21%	18%	Return on equityROE
6%	11%	−17%	8%	−46%	18%	14%	28%	20%	15%	12%	Retained to equityRetained/eq
											Balance sheet
$200M	$280M	$175M	$169M	$151M	$168M	$206M	$238M	$223M	$258M	$254M	Cash & investmentsCash+inv
$342M	$433M	$511M	$466M	$359M	$523M	$664M	$585M	$552M	$504M	$522M	InventoryInvent.
$259M	$339M	$446M	$390M	$316M	$480M	$533M	$438M	$495M	$459M	$598M	Accounts payablePayables
$83M	$94M	$65M	$76M	$43M	$43M	$131M	$147M	$57M	$45M	($76M)	Operating working capitalOper. WC
$1.0B	$1.3B	$1.4B	$1.2B	$978M	$1.4B	$1.8B	$1.6B	$1.6B	$1.5B	$1.5B	Current assetsCur. assets
$397M	$742M	$952M	$599M	$529M	$1.1B	$1.1B	$822M	$772M	$957M	$1.1B	Current liabilitiesCur. liab.
2.6×	1.8×	1.5×	2.0×	1.8×	1.2×	1.6×	2.0×	2.1×	1.6×	1.4×	Current ratioCurr. ratio
$152M	$154M	$93M	$90M	$45M	$140M	$129M	$134M	$133M	$134M	$136M	GoodwillGoodwill
$3.1B	$3.3B	$3.2B	$3.0B	$2.8B	$3.3B	$3.5B	$3.6B	$3.7B	$3.8B	$3.9B	Total assetsAssets
$920M	$921M	$758M	$1.0B	$1.1B	$1.1B	$1.1B	$1.1B	$1.1B	$1.1B	$1.1B	Total debtDebt
$720M	$641M	$583M	$869M	$950M	$922M	$890M	$864M	$872M	$858M	$870M	Net debt / (cash)Net debt
4.6×	6.4×	2.7×	5.2×	0.4×	9.3×	6.9×	5.8×	7.6×	8.2×	7.5×	Interest coverageInt. cov.
$1.3B	$1.5B	$1.2B	$998M	$691M	$947M	$898M	$1.3B	$1.4B	$1.6B	$1.6B	Shareholders’ equityEquity
0.7%	0.6%	0.7%	0.3%	0.3%	0.6%	0.5%	0.5%	0.6%	0.6%	0.5%	Stock comp / revenueSBC/rev
											Per share
62.9M	62.7M	61.7M	58.8M	56.6M	56.8M	56.9M	56.5M	55.7M	54.2M	52.6M	Shares out (diluted)Shares
$38.33	$43.33	$52.54	$56.75	$46.18	$60.02	$75.94	$69.58	$71.71	$68.51	$67.97	Revenue / shareRev/sh
$2.34	$3.96	$-1.83	$2.67	$-4.20	$4.40	$3.67	$7.88	$6.82	$6.11	$5.42	EPS (diluted)EPS
$4.45	$3.21	$2.41	$3.66	$3.87	$1.09	$-0.81	$7.98	$9.71	$9.43	$9.54	Owner earnings / shareOE/sh
$4.45	$3.21	$1.12	$2.36	$3.13	$1.09	$-1.95	$6.21	$8.10	$7.21	$8.21	Free cash flow / shareFCF/sh
$1.03	$1.23	$1.30	$1.36	$1.41	$1.41	$1.48	$1.56	$1.67	$1.77	$1.84	Dividends / shareDiv/sh
$1.78	$2.34	$3.71	$3.81	$3.53	$3.43	$3.71	$4.32	$4.33	$5.06	$4.54	Cap. spending / shareCapex/sh
$20.25	$23.99	$18.70	$16.97	$12.21	$16.67	$15.78	$22.37	$25.58	$28.60	$29.81	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+6.7%/yr	+8.2%/yr
Owner earnings / share	+8.7%/yr	+19.5%/yr
EPS	+11.3%/yr	—
Dividends / share	+6.2%/yr	+4.6%/yr
Capital spending / share	+12.3%/yr	+7.4%/yr
Book value / share	+3.9%/yr	+18.6%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

54Mpeak FY2016

ROIC

16%low FY2018

Gross margin

25%low FY2020

Net debt ÷ owner earnings

1.7×peak FY2021

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$511Mowner earningsvs.$331Mnet incomelow FY2022

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $511M of owner earnings, the operating cash left after the $154M it takes just to hold its position. It put $120M more into growth; free cash flow, after that spending, was $391M.

Reported net income$331M

Owner earnings$511M · 14% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$331M	$380M	$445M	$209M	$250M
Depreciation & amortizationnon-cash charge added back	+$154M	+$151M	+$144M	+$146M	+$160M
Stock-based compensationreal costnon-cash, but a real cost	+$24M	+$25M	+$20M	+$23M	+$21M
Working capital & othertiming of cash in and out, other non-cash items	+$156M	+$136M	−$14M	−$278M	−$174M
Cash from operations	$665M	$692M	$595M	$100M	$257M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$154M	−$151M	−$144M	−$146M	−$195M
Owner earnings	$511M	$541M	$451M	($46M)	$62M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$120M	−$90M	−$100M	−$65M	—
Free cash flow	$391M	$451M	$351M	($111M)	$62M
Owner-earnings marginowner earnings ÷ revenue	14%	14%	11%	-1%	2%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $154M, roughly its depreciation, the rate its assets wear out). The other $120M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $24M), owner earnings is nearer $487M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 8.2×

Comfortable

Operating income $621M ÷ interest expense $76M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $858M · 1.4× operating profit

Modest net debt

Cash $258M − debt $1.1B

What this means
Netting $258M of cash and short-term investments against $1.1B of debt leaves $858M owed, about 1.4× a year's operating profit (1.8× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? —

Not enough data

What this means
The filing data didn't include the inputs for this check.

Is it a good business?

Return on invested capital 15%

Solid through the cycle

9-yr median, range 4%–25%; 16% latest = NOPAT $390M ÷ invested capital $2.4B

Industry peers: median 10%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 16% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 7%

Solid through the cycle

10-yr median margin, range -1%–14%; latest $511M = operating cash $665M − maintenance capex $154M

Industry peers: median 9%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 14% of revenue this year, a 7% median across 10 years. It chose to put $120M more into growth, so free cash flow this year was $391M — the gap is investment, not weakness. Treating stock comp as the real expense it is (less $24M of SBC) leaves $487M.
Are earnings backed by cash? 2.01×

Cash-backed

Cash from ops $665M ÷ net income $331M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 52%

Returns about half

Dividends + buybacks $264M ÷ Owner Earnings $511M

What this means
Of $511M Owner Earnings, $264M (52%) went back to shareholders, $96M dividends, $168M buybacks. Net of $24M stock comp, the real buyback was about $144M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 1.78×

Expanding

Capex $274M ÷ depreciation $154M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $3.7B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Near

Current ratio ≥ 2× · 1.61×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $1.1B vs $582M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Miss

A profit every year (10-yr record) · 2 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +310%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $7.46/share (latest year $6.41), the averaged base the calculator's gate runs on, and book value is $30.03/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 8 of 10

What this means
Lost money in 2 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 4 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 9% → 15% (3-yr avg ends)

In the filing’s words The record and the words agree: the margin widened and the filing attributes the gain to its own pricing, not volume alone.

What this means
Through the cycle the operating margin widened — about 9% early to 15% lately, median 10% — pricing power intact or improving.
Reinvestment, incremental ROIC returns capital

What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
Owner earnings growth +9%/yr

What this means
Owner earnings grew about 9% a year over the record.
Worst year 2020 · 0.8% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −1.6%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.5B

Cash & short-term investments$253M
Inventory$522M
Other current assets$772M

Current liabilities$1.1B

Debt due within a year$261M
Accounts payable$598M
Other current liabilities$209M

Current ratio1.45×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.96×stricter: inventory excluded

Cash ratio0.24×strictest: cash alone against what's due

Working capital$479Mthe cushion left after near-term bills

Debt due this year vs. cash$261M due · $253M cash cash alone won't cover the maturities; it leans on refinancing or operating cash · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago−3.4%the freshest read on whether the business is still growing

Current ratio, recent quarters2.2× → 1.4×

Deeper floors

Tangible book value$1.4Bequity stripped of goodwill & intangibles

Debt incl. operating leases$1.2B$98M of it operating leases

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$254M

'27$129M

'28$9M

'29$300M

'30$0

later$400M

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$254Mthe first rung: what must be repaid or rolled over within the year

Within two years$383Mthe near wall, the part most exposed to today’s credit conditions

Biggest single year$300Min 2029the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$1.1Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, Mar 31, 2026$253M

One year of owner earnings (FY2025)$511M

Together, against $254M due next year3.0×

Cash on hand as of Mar 31, 2026 plus a year’s owner earnings comes to $764M against the $254M due in the twelve months after the Sep 30, 2025 schedule: 3.0 times it.

Maturity schedule extracted from the company’s Sep 30, 2025 annual report and reconciled to the total the table states.

How the cash was used, 2016–2025

Over the record, the business generated $4.1B of operating cash; how management split it reads as a reinvestor, most operating cash is plowed back into the business.

Reinvested$2.1B · 51%
Dividends$823M · 20%
Buybacks$959M · 23%
Retained (debt / cash)$228M · 6%

Returned to owners$1.8B
69% of the owner earnings the business produced over the span, $823M as dividends and $959M as buybacks.
Average price paid for buybacks—
Buybacks ran $959M over the span, but the filings don't tag the share count needed to deduce the average price paid.
Net change in share count−16.4%
The diluted count fell from 63M to 53M, so the buybacks outran the stock issued to staff.
Dividend record$1.77/sh
Paid in 10 of the years on record, the per-share dividend growing about 6% a year. It was never cut over the span.
Return on what it retained—
Not read here: owner earnings are negative over the span, or the company returned nearly all its earnings rather than retaining them, so there is too little retained to measure a return on.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$189M5% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity9%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$195Mover 10 years buying other businesses, against $2.1B of capital spent building

$92M written down across 1 year (2018): goodwill the company has already conceded it overpaid for, charged against earnings. That is roughly 47% of the cash it put into acquisitions over the span. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Sean D. Keohane	$8.2M	$17.1M	$62M
2022	Sean D. Keohane	$7.9M	$17.2M	($46M)
2023	Sean D. Keohane	$7.8M	$8.1M	$451M
2024	Sean D. Keohane	$9.6M	$26.1M	$541M
2025	Sean D. Keohane	$9.3M	$1.3M	$511M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership3.1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio171:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$24M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 4% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Cabot is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

1 of the 6 tests turned up something to look into; the other 5 came back clean.

Look hereAre "one-time" charges a yearly habit?5 of 10 years
Management took an impairment or write-down in 5 of the last 10 years, $516M in all. Taken across the majority of the record, the "one-time" label is wearing thin — ask whether these are past deals coming due rather than genuinely isolated events. Read it beside the goodwill the company still carries.

And these came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

How much of the revenue rides on one buyer?
≈$1.8B · 50% of revenue on the largest customers (TTM)
“In our battery materials product line, sales to four customers account for approximately 50% of revenue.”verify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Chemicals

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
SOLSSolstice Advanced Materials Inc.	$3.9B	35%	21.2%	23%	20%
CBTCabot	$3.7B	24%	11.3%	15%	8%
FULH. B. Fuller Company	$3.5B	28%	8.2%	6%	5%
FMCFMC Corp.	$3.5B	40%	14.8%	11%	9%
SMGScotts Miracle-Gro	$3.4B	32%	11.7%	14%	10%
AVNTAvient	$3.3B	27%	6.5%	7%	5%
ESIElement Solutions Inc.	$2.6B	42%	12.6%	5%	9%
OECOrion S.A.	$1.8B	25%	10.0%	10%	3%
Group median	—	30%	11.5%	11%	9%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Cabot has delivered.

Cabot’s latest year runs above its own through-cycle margin — the reported figure may flatter a peak. So the tool opens on the through-cycle base, Graham’s averaging cutting both ways; clear the toggle below to read the latest year exactly as reported.

Today’s price $

Through the cycle, Cabot earns about $293M on its 7.9% median owner-earnings margin. This year’s 13.8% margin runs above that; the reported figure may flatter a peak you'd be paying on. Normalize, below, values the price on that through-cycle figure rather than the latest year. It comes pre-checked here for that reason, the same rule that already normalizes a trough; clear it to price the year as filed.

Base Normalize · through-cycle ($293M) Net of stock comp (−$17M) Steady-state · maintenance capex ($517M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+185%/yr

Owner-earnings growth · ’16→’25+6%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $432M on 52M shares outstanding, per the 10-Q cover, as of 2026-05-01; net debt $870M. The base opens on the through-cycle figure (the latest year sits above the record’s own median, and Graham’s averaging cuts both ways); clear Normalize to use the year as filed. Net of stock comp treats option pay as the expense it is. Capex ($239M) runs well above depreciation ($169M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $517M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh CBT against another business →

The owners of CBT: the meeting and the votes →

Cite: Owner Scorecard, "Cabot (CBT), the owner's record," https://ownerscorecard.com/c/CBT, data as of 2026-07-09.

Manual order: ← CBSH its page in the Manual CBU →

Industry order: ← BCPC the Chemicals chapter CC →