It has been about a month since the last earnings report for Cooper Tire (CTB). Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cooper Tire due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cooper Tire Q1 Earnings Fail to Meet Expectations
Cooper Tire reported first-quarter 2021 adjusted earnings of 43 cents per share, which lagged the Zacks Consensus Estimate of 71 cents. This underperformance resulted from higher selling, general & distribution (SG&A) expenses incurred during the quarter. Notably, SG&A expenses rose to $71.2 million from the prior-year’s quarter of $51.2 million.
Nonetheless, the bottom line compares favorably with the loss per share of 6 cents recorded in the prior-year quarter. The company’s net sales jumped 23.3% year over year to $656 million for first-quarter 2021, mainly on higher unit volumes, favorable price/mix and favorable foreign currency impact. The reported figure also surpassed the Zacks Consensus Estimate of $633 million.
Net sales in Americas Tire Operations climbed 23% year over year to $562 million on higher unit volume and favorable currency translations. The reported figure, moreover, beat the Zacks Consensus Estimate of $509 million. Operating profit in the segment skyrocketed 473.8% from the year-ago quarter to $60 million and also topped of the consensus mark of $54 million. Operating margin was 10.7% compared with the prior-year quarter’s 2.3%.
Revenues in International Tire Operations grew 36.1% from the prior year to $139 million due to higher unit volume and favorable forex impact. The reported figure also outpaced the Zacks Consensus Estimate of $101 million. The unit registered operating profit of $3 million as against operating loss of $10 million posted in the year-ago quarter as well as beat the consensus mark of $1.4 million. Operating margin was 2.3% versus the negative 10% reported in the prior-year quarter.
Cooper Tire had cash and cash equivalents of $460.4 million as of Mar 31, 2021, compared with the $433.4 million recorded in the year-ago period. Capital expenditure for first-quarter 2021 increased to $57 million from the year-ago level of $55 million. As of Mar 31, 2021, long-term debt and finance leases amounted to $309.2 million, up from the $301.9 million recorded as on Mar 31, 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
At this time, Cooper Tire has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Cooper Tire has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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