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Goodyear, Bridgestone to Form JV for Tire Distribution in US

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The Goodyear Tire & Rubber Company GT announced that it is entering a 50-50 joint venture (JV) with Bridgestone Americas, Inc. (Bridgestone), which is the U.S. subsidiary of Bridgestone Corporation BRDCY, to form the largest tire-distribution network in the United States. TireHub LLC, the new JV, will offer a complete range of light-truck and passenger-vehicle tires with primary importance on fulfilling the rising demand for larger rim-diameter premium tires. Anticipated to close during mid-2018, the transaction is subject to customary approvals.

The new JV will unite Goodyear's wholesale distribution network with Bridgestone’s Tire Wholesale Warehouse (“TWW”). The transaction will allow Goodyear and Bridgestone to develop their individual tire businesses and benefit from the enhanced value of their respective brands. Further, the new JV will offer on-demand access to Goodyear’s and Bridgestone’s complete range of tires to customers, who have limited space at their locations. Also, it will help the customers of Goodyear and Bridgestone to manage increasing complexity of tire business, primarily due to SKU proliferation.

To be headquartered in Atlanta, TireHub will begin operations with roughly 80 warehouse locations and distribution centers in the United States. Further, the new entity will complement the existing third-party distributors’ network of Goodyear and Bridgestone and supply fully integrated distribution, warehousing, sales and delivery solutions, soon after the completion of the transaction.

The Goodyear Tire & Rubber Company Price and Consensus

The Goodyear Tire & Rubber Company Price and Consensus | The Goodyear Tire & Rubber Company Quote

Per management, with devoted focus on driving logistics and customer service excellence, TireHub will help Goodyear to manage customers by offering its products while satisfying customers’ evolving shopping pattern.

Price Performance

Over a year, shares of Goodyear outperformed the industry it belongs to. During the period, its stock has lost 18.7% in comparison with the industry’s decline of 21.8%.

Zacks Rank & Key Picks

Goodyear carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are BorgWarner Inc. BWA and Volkswagen AG VLKAY, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BorgWarner has an expected long-term growth rate of 8.6%. Shares of the company have risen 38.5% in the past year.

Volkswagen has an expected long-term growth rate of 18.7%. Over a year, shares of the company have gained 39.4%.

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