Product Launches to Aid Goodyear, Raw Material Costs a Woe
On Mar 26, we issued an updated research report on The Goodyear Tire & Rubber Company GT.
In order to boost sales and remain competitive in the market, Goodyear frequently launches innovative products and services for its consumers. At the beginning of March, it offered a preview of its two latest products. One of the prototypes was of a new tire, designed to cater the electric vehicle market, which is anticipated to be available in Europe from 2019. Additionally, it is also developing a real-time communication application that will facilitate fleet operators to communicate in real time via a mobile application.
Further, a strong balance sheet helps the company to pay frequent cash dividends to boost shareholders’ confidence. In January, Goodyear declared a quarterly dividend of 14 cents. Earlier in October 2017, it hiked the dividend payment by 40% from the previous amount of 10 cents.
The Goodyear Tire & Rubber Company Price and Consensus
The Goodyear Tire & Rubber Company Price and Consensus | The Goodyear Tire & Rubber Company Quote
Goodyear reported adjusted earnings per share of 99 cents for fourth-quarter fiscal 2017, beating the Zacks Consensus Estimate of 96 cents. Quarterly revenues were $4.07 billion. The top line also surpassed the Zacks Consensus Estimate.
In 2018, the company anticipates operating income of $1.8-$1.9 billion in comparison with $1.6 billion recorded in the prior year.
However, increased raw material costs, leading to unabsorbed overhead expenses have hampered Goodyear’s operating income. Also, taking up of new pension standards have contributed to rising expenses.
Moreover, competitive environments, weak product demand in the market and difficult industry condition have led to the declined sales for Goodyear. In 2017, it witnessed a 4.2% year-over-year decline to 6.9 million units in its worldwide tire sales.
The company’s stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 17% downward over the last seven days.
Price Performance
In the last six months, shares of Goodyear have outperformed the industry it belongs to. The stock has lost 18.7%, narrower than the industry’s decline of 20.5%.
Zacks Rank & Key Picks
Goodyear carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Spartan Motors, Inc. SPAR, Tenneco Inc. TEN and Standard Motor Products, Inc. SMP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Spartan Motors has an expected long-term growth rate of 15%. In the last six months, shares of the company have soared 54.6%.
Tenneco has an expected long-term growth rate of 13.5%. The stock has seen the Zacks Consensus Estimate for annual earnings being revised 0.1% upward over the last seven days.
Standard Motor has an expected long-term growth rate of 6%. In the last three months, shares of the company have gained 3.4%.
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