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Goodyear (GT) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

The Goodyear Tire & Rubber Company GT is slated to report fourth-quarter and 2018 earnings on Feb 8, before the market opens. In the last reported quarter, this tire manufacturer witnessed a negative surprise of 10.5%. The company surpassed estimates in three out of the trailing four quarters, the average beat being 11%.

Over the past six months, shares of Goodyear have underperformed the industry it belongs to. The stock has lost 16.5% compared with 9.5% decline recorded by the industry.

Let’s see, how things are shaping up for this announcement.

The Goodyear Tire & Rubber Company Price and EPS Surprise


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

Factors to Consider

Goodyear is witnessing an increase in global shipments and anticipates doubling production to $6 million units by 2019. The company was successful in recovering its share in 17-inch and bigger rim size markets in the United States, and Europe. The improving industry in the United States and Europe, along with rising shares, is likely to drive volume and mix growth. This is anticipated to have positive influence on the soon-to-be-released results.

However, deteriorating market conditions in China, increased raw-material costs and a reduced price/mix are a few concerns for Goodyear. The company revised segmental operating income expectation for 2018 to reflect the challenging industry environment. It expects segmental operating income to exceed $1.3 billion, down from previous $1.45-$1.5 billion.

Earnings Whisper

Our proven model does not conclusively predict that Goodyear is likely to beat on earnings this quarter. This is because, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Goodyear has an Earnings ESP of -6.06% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 52 cents and 55 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank 3. Further, this, combined with its negative Earnings ESP, makes the surprise prediction difficult.

Note that we caution against Rank #4 and 5 (Sell-rated) stocks going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:

O’Reilly Automotive, Inc. ORLY has an Earnings ESP of +2.01% and a Zacks Rank of 3. The company is slated to report fourth-quarter 2018 results on Feb 6.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Wabco Holdings Inc. WBC has an Earnings ESP of +2.81% and it currently carries a Zacks Rank of #3. Its fourth-quarter 2018 results are slated to release on Feb 15.

Allison Transmission Holdings, Inc. ALSN has an Earnings ESP of +3.48% and it presently carries a Zacks Rank of #3.

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