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Cooper Tire's (CTB) Q4 Earnings & Revenues Beat Estimates

Zacks Equity Research

Cooper Tire & Rubber Company CTB reported fourth-quarter 2019 adjusted earnings per share of $1.02, up from the loss of 1 cent recorded in the prior-year quarter. The bottom-line figure also surpassed the Zacks Consensus Estimate of 67 cents. Solid revenues from the American Tire operations resulted in this upside.

The company’s net sales declined 2.6% year over year to $750 million in fourth-quarter 2019, mainly marred by lower unit volume. The reported figure, however, surpassed the Zacks Consensus Estimate of $742 million.

Gross profit amounted to $131.5 million, up from the $124.6 million recorded in the prior-year quarter. Additionally, operating profit came in at $63.6 million, significantly up from the year-earlier quarter’s $24.8. Lower raw-material costs, and favorable price and mix aided the company’s profitability during the reported quarter.

Segment Details

Net sales in the Americas Tire Operations edged down 1.4% year over year to $655 million due to lower unit volume. However, the reported figure outpaced the Zacks Consensus Estimate of $639 million. Operating profit in the segment increased 19.6% to $84 million. This upswing was mainly driven by upbeat price and mix, lower raw-material costs and favorable SG&A. Further, operating margin was 12.9% compared with the prior-year quarter’s 10.6%.

Revenues in the International Tire Operations declined 20.1% to $119 million due to lower unit volume, unfavorable price and mix, and negative foreign-currency translation impact. The revenue figure also missed the Zacks Consensus Estimate of $133 million. Operating loss was $6 million, narrower than the operating loss of $33 million posted in the year-ago quarter. Operating margin was a negative 5% as against a negative 22.2% reported in the prior-year quarter.

Cooper Tire & Rubber Company Price, Consensus and EPS Surprise

 

Cooper Tire & Rubber Company Price, Consensus and EPS Surprise

Cooper Tire & Rubber Company price-consensus-eps-surprise-chart | Cooper Tire & Rubber Company Quote

Dividend & Financial Position

The company announced a quarterly dividend of 10.5 cents a share, payable on Mar 27, to shareholders of record on Mar 3, 2020. This marks the 192nd consecutive quarterly dividend paid by the company.

Cooper Tire had cash and cash equivalents of $391.3 million as of Dec 31, 2020 compared with $356.2 million recorded in the year-ago period. Capital expenditures declined to $47 million from the year-ago quarter’s $49 million.

As of Dec 31, 2019, long-term debt and finance leases amounted to $309.1 million, down from $121.3 million as of Dec 31, 2018. The debt-to-capital ratio stands at 20.16%.

Outlook

The company projects its operating margin to improve in 2020, with a better second-half, and the full-year margin coming in higher than the 2019 figure of 6.3%. Capital expenditure is expected in the $260-$280 million band this year.

The company expects higher manufacturing costs and SG&A expenses in the first quarter of 2020. Charges related to the restructuring of the company's Mexico manufacturing facility is estimated to be around $10 million in first-quarter 2020.

Zacks Rank & Stocks to Consider

Currently, Cooper Tire carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include SPX Corporation SPXC and Fox Factory Holding Corp. FOXF and Adient PLC ADNT, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

SPX has an expected earnings growth rate of 6.52% for 2020. The stock has rallied 32.4% in the past year.

Fox Factory has an estimated earnings growth rate of 9.67% for the ongoing year. The company’s shares have gained 18.2% in a year’s time.

Adient has an estimated earnings growth rate of 17.79% for the current year. The company’s shares have appreciated 23.9% over the past year.

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