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Value

Goodyear Tire & Rubber Company (GT - Analyst Report) recently posted its best quarterly sales in the company's 113-year history. This Zacks #1 Rank (strong buy) is expected to post triple digit earnings growth in 2011. It's also dirt cheap, with a forward P/E of just 6.4.

Goodyear is one of the world's largest tire companies with customers in nearly all countries around the globe. Founded in 1898 as the bicycle craze took off and demand for bike tires surged, the company became the world's largest rubber company in 1926.

Best Quarterly Sales Ever in Q3

On Oct 28, Goodyear reported its third quarter results which saw sales eclipse $6 billion in one quarter for the first time in the company's history.

Sales surged 22% to $6.1 billion from a year ago as price/mix improvement pushed revenue per tire up 18%. Several segments saw record quarterly sales.

North American Tire's sales jumped 18% to a record $2.6 billion. Europe, Middle East and Africa Tire's sales grew 31% to $2.2 billion, boosted by strong winter tire sales.

Latin America Tire also saw record sales which jumped 14% to $651 million.

Outlook for 2011

Goodyear is optimistic about the rest of 2011. It expects the global tire industry to continue to grow, but at the low end of ranges previously forecasted in all segments except commercial original equipment.

The company expects 2011 to be a record-setting year in both sales and segment operating income.

Zacks Consensus Estimates Jump

Analysts like what they heard in the third quarter report. 6 estimates moved higher over the last 30 days pushing the 2011 Zacks Consensus up to $2.02 form $1.63 per share.

That is incredible earnings growth of 358% as the company made just 44 cents in 2010.

The growth is expected to continue in 2012 as well. The 2012 Zacks Consensus rose to $2.41 from $2.22 in the last month. That is another 19.6% earnings growth.

Goodyear is Cheap

Shares of Goodyear sold off during the summer slump and then rallied in October.

But they still remain cheap. In addition to a P/E of just 6.4, Goodyear has a price-to-book of 2.5. A P/B ratio under 3.0 usually indicates value.

It also has a price-to-sales ratio of 0.1. A P/S under 1.0 can mean a company is undervalued.

Additionally, Goodyear has a crazy high 1-year return on equity (ROE) of 43.4%. The S&P 500, by comparison, is averaging just 13.4%.

Goodyear still has what it takes even after all these years. With a P/E under 10, it is also an attractive play for value investors.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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