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Cooper Tire & Rubber

CTB

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Cooper Tire & Rubber Co. (CTB - Analyst Report) reported solid third quarter results early last month, which led to an increase in all earnings estimates for this year over the past 30 days. This Zacks #1 Rank (Strong Buy) replacement tire maker also reached its 52-week high of $24.98 on November 29.

Solid Earnings Growth in Q3

On November 2, Cooper Tire & Rubber posted a more than four fold increase in earnings for its third quarter to $74.1 million or $1.17 per share, compared to last year’s $17.3 million or $0.27. EPS trounced the Zacks Consensus Estimate by nearly 35%.

Revenues in the quarter increased 4.5% year over year to $1.10 billion, driven by higher sales in North America.

Cost of goods sold fell 6.6% to $897.5 million in the quarter. As a result, both gross profits and operating profits more than doubled to $198.2 million and $129.6 million, respectively, from the prior year levels. Furthermore, management expects raw material prices to remain flat in the fourth quarter compared to the third quarter of the year.

Earnings Momentum Climbing

The Zacks Consensus Estimate for 2012 is at $3.09 per share, gaining 20.7% in the past month as all 6 estimates were revised higher. For 2013, the Zacks Consensus Estimate rose 8.1% to $3.22 in the same timeframe, based on upward revisions from 5 of 7 estimates.

The estimates for 2012 and 2013 suggest year-over-year growth of 157.8% and 4.1%, respectively.

A Look at the Chart

Cooper Tire’s stock price has doubled year-to-date, as its strong product portfolio, favorable demand environment and improved manufacturing efficiencies helped lower costs.

The chart shows the formation of a new trend in the first quarter of 2012 when the 50-day moving average crosses above the 200-day moving average . Furthermore, the rising 200-day moving average undoubtedly signals optimism.

Volume is fairly strong, averaging roughly 1,137K daily. The 1-year return for the stock is 90.1%, which is substantially higher than the S&P 500’s 21.2%.

Founded in 1914 and headquartered in Findlay, Ohio, Cooper Tire & Rubber Co. manufactures tires and related products for passenger vehicles and light trucks. The $1.6 billion company has 9 manufacturing facilities and 38 distribution centers located in 11 countries across the globe. It is the ninth largest tire company in the world and fourth largest in North America in terms of sales.


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