The Goodyear Tire & Rubber Company GT reported adjusted earnings per share of 99 cents in comparison to 95 cents in the prior-year quarter. Moreover, the bottom line surpassed the Zack Consensus Estimate of 76 cents. The company reported net loss of $96 million against net income of $561 million in fourth-quarter 2016.
Revenues in the quarter under review were $4.07 billion, beating the Zacks Consensus Estimate of $3.91 billion. The top line also comfortably rose from $3.74 billion a year ago.
During the quarter under concern, tire unit volumes were 42 million, up 2% from fourth-quarter 2016. Replacement tire shipments rose 3% while original equipment unit volume slipped 1% in comparison to the year-earlier quarter.
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 operating income dropped to $419 million in the reported quarter from $479 million a year ago.
Fiscal 2017 Results
Goodyear reported earnings of $1.37 per share in fiscal 2017, down from $4.74 earned in fiscal 2016. The Zacks Consensus Estimate for the metric was $2.89.
Net income decreased to $346 million from $1.3 billion a year ago. Further, sales rose to $15.4 billion from $15.2 billion in fiscal 2016. Moreover, the top line surpassed the Zacks Consensus Estimate of $15.3 billion.
Revenues at the Americas’ segment gained 6% year over year to $2.2 billion, reflecting a 4% rise in tire unit volume and favorable price mix. Original equipment unit volume was flat in comparison to the prior-year quarter. Replacement tire shipments were up 5%, primarily driven by a rise of 8% in the United States consumer replacement.
Driven by higher raw material costs and increased costs due to lesser production, segment operating income plunged to $209 million from $295 million a year ago.
Revenues from the Europe, Middle East and Africa segment were $1.3 billion, up 12% year over year. This upside is driven by an improved price mix and a favorable foreign currency translation. Original equipment unit volume was down 12% while replacement tire shipments gained 2% year over year.
Segment operating income increased to $93 million from $81 million a year ago. This upside is primarily on the back of improved price mix and cost saving initiatives, partly offset by soaring raw material costs.
Revenues from the Asia-Pacific segment grew 14% to $623 million, reflecting an improved price mix. Original equipment unit volume gained 12% while replacement tire shipments were flat year over year. Segment operating income rose to $117 million from $103 million a year ago. This rise is driven by an improved product mix, partly offset by high raw material costs.
Goodyear had cash and cash equivalents of $1.04 billion as of Dec 31, 2017, down from $1.13 billion as of Dec 31, 2016. Long-term debt and capital leases amounted to $5.1 billion as of Dec 31, 2017, up from $4.8 billion as of Dec 31, 2016.
At the fiscal 2017-end, the company recorded a total cash flow of $1.2 billion from operating activities in comparison to $1.6 billion, recorded at the end of comparable quarter last year. Also, capital expenditure for the period decreased to $881 million from $996 million a year ago.
During the reported quarter, Goodyear repurchased 6.3 million shares for $195 million under the previously announced $2.1 billion share repurchase program.
Since the company’s share repurchase program inception in 2013, Goodyear repurchased total of 44 million shares for $1.3 billion.
Goodyear anticipates operating income within the band of $1.8-$1.9 billion, approximately, for 2018.
The company has also updated its 2020 segment operating income target and capital allocation plan. It expects to achieve a target of $2-$2.4 billion in 2020 in the segment operating income. While the capital allocation plan includes restructuring, growth capital, debt and pension payments plus a shareholder return program.
Zacks Rank & Key Picks
Goodyear carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Peugeot SA PUGOY, Lear Corporation LEA and Genuine Parts Company GPC, each with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peugeot has an expected long-term growth rate of 16.6%. Shares of the company have gained 4.5% in the last 30 days.
Lear Corp has an expected long-term growth rate of 7.1%. The stock has jumped 29.1% in the last six months.
Genuine Parts has an expected long-term growth rate of 7.2%. In the last six months, shares of the company have rallied 18.9%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PEUGEOT SA (PUGOY) : Free Stock Analysis Report
Lear Corporation (LEA) : Free Stock Analysis Report
Genuine Parts Company (GPC) : Free Stock Analysis Report
The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research