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Cooper Tire (CTB) Down 3.5% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
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A month has gone by since the last earnings report for Cooper Tire (CTB). Shares have lost about 3.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cooper Tire due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cooper Tire Q1 Earnings & Revenues Surpass Estimates

Cooper Tire posted adjusted earnings of 22 cents per share in the first quarter of 2019, beating the Zacks Consensus Estimate of 20 cents.

The company’s net sales increased 2.9% year over year to $619 million, surpassing the Zacks Consensus Estimate of $608 million. Gross profit was $88.3 million, marking rise from $84.5 million recorded in the prior-year quarter.

Reportedly, operating profit was $26.4 million, almost in line with first-quarter 2018.

Segment Details

Americas Tire Operations registered a 6.1% increase in net sales to $515 million. Operating profit in this segment rose 24.2% to $39 million while operating margin was 7.5% compared with6.4% in the prior-year period.

International Tire Operations registered a 10.8% decline in revenues to $144 million. Operating loss was $1 million against operating income of $7 million in the year-ago quarter. Operating margin was a negative 0.9% against a positive 4.6% in the year-ago quarter.

Financial Position

At the end of the first quarter, Cooper Tire had cash and cash equivalents of $212  million compared with $213 million in the year-ago quarter. Capital expenditure decreased to $60 million during the quarter, which was similar to first-quarter 2018.

Outlook

For 2019, the company reiterated guidance of modest growth in unit volume compared with the actual figure in 2018. It expects operating margin to improve in 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -13.1% due to these changes.

VGM Scores

Currently, Cooper Tire has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Cooper Tire has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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