Cooper Tire Shares Gain on Earnings Beat

Zacks

Shares price of Cooper Tire & Rubber Co. (CTB) increased 6.8% to $27.48 on May 2, after the company reported better-than-expected results. Earnings in the first quarter of 2014 fell significantly to 71 cents from 87 cents per share in the prior-year quarter. However, the figure significantly surpassed the Zacks Consensus Estimate of 49 cents. Net income amounted to $45 million as against $56 million in the first quarter of 2013.

Revenues of Cooper Tire declined 7.6% year over year to $796 million in the quarter, lagging the Zacks Consensus Estimate of $832 million.

Operating profit declined to $81 million (10.2% of sales) from $97 million (11.2%) a year ago.

Segment Details

The North American Tire Operations recorded a 6% decline in revenues to $563 million. Operating profit in the segment deteriorated to $69 million or 12.2% of sales from $72 million or 11.9% in the first quarter of 2013.

The International Tire Operations posted a 9% fall in revenues to $310 million. The decrease can be attributed to lower unit volumes and unfavorable pricing and mix, partially offset by favorable currency effects. Operating profit dropped to $23 million or 7.5% of sales from $30 million or 8.8% a year ago.

Financial Position

Cooper Tire had cash and cash equivalents of $336 million as of Mar 31, 2014, up from $272 million in the corresponding year-ago quarter end. Long-term debt stood at $347 million as of Mar 31, 2014, translating into a long-term debt-to-capitalization ratio of 25.7% against $351.6 million of debt and long-term debt-to-capitalization ratio of 30.1% as of Mar 31, 2013.

Outlook

Cooper Tire expects raw material costs to remain flat sequentially in the second quarter of 2014. For 2014, capital expenditures are expected between $165 million and $175 million.

Cooper Tire & Rubber Company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the sector are Gentherm Incorporated (THRM), Tower International, Inc. (TOWR) and Modine Manufacturing Company (MOD), all of which carry a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on THRM
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Read the Full Research Report on MOD


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