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Goodyear (GT) Earnings Miss Estimates in Q4, Decrease Y/Y

Zacks Equity Research

The Goodyear Tire & Rubber Company GT has reported adjusted earnings per share of 51 cents in fourth-quarter 2018 compared with 99 cents in the prior-year quarter.

The bottom line missed the Zack Consensus Estimate of 60 cents. The company reported net income of $110 million against net loss of $96 million in the year-ago quarter.

The company delivered net revenues of $3.88 billion, lower than $4.07 billion in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $3.93 billion. During the quarter under review, revenues were impacted by lower volume and currency fluctuations. These effects were partly offset by improvements in price/mix.

During the reported quarter, tire unit volume was 40.7 million, down3% from the year-ago quarter. Replacement tire shipments were nearly flat while original equipment unit volume fell 10% from the prior-year quarter.

Segmental operating income was $307 million, down from $430 million in fourth-quarter 2017.

2018 Results

For 2018, adjusted earnings per share were $2.32, down from $3.12 in 2017.

Revenues in 2018 were $15.5 billion, up 1% from the 2017 figure.

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise | The Goodyear Tire & Rubber Company Quote

Segment Details

Revenues in the Americas’ segment declined year over year from $2.18 billion to $2.11 billion. Segment’s operating income was $179 million, down from $217 million in fourth-quarter 2017.

Revenues at the Europe, Middle East and Africa segment were $1.21 billion, down 4% year over year. The segment’s operating income decreased 23% to $74 million.
 
Revenues at the AsiaPacific segment declined 11% to $552 million. The segment’s operating income declined to $54 million year over year from $117 million.

Financial Position

Goodyear had cash and cash equivalents of $801 million as of Dec 31, 2018, down from $1.04 billion as of Dec 31, 2017. Long-term debt and capital leases amounted to $243 million as of Dec 31, 2018, up from $391 million as of Dec 31, 2017.

Capital Deployment

During the reported quarter, Goodyear repurchased 897000 shares for $20 million under the previously announced $2.1-billion share buyback program.

Since the beginning of the program in 2013, the company has bought back 52.9 million shares for $1.5 billion.

Zacks Rank & Stocks to Consider

Currently, Goodyear  carries a Zacks Rank#5 (Strong Sell).

A few better-ranked stocks in the auto space are Dana Inc. DAN, Oshkosh Corp. OSK and Toyota Motor Corp. TM. While Dana currently sports a Zacks Rank #1 (Strong Buy), Oshkosh and Toyota carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dana has an expected long-term growth rate of 2.9%. Over the past three months, shares of the company have risen 13.8%.

Oshkosh has an expected long-term growth rate of 11.3%. Over the past three months, shares of the company have surged 13.6%.

Toyota has an expected long-term growth rate of 5.2%. Over the past three months, shares of the company have risen 0.6%.

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