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Goodyear (GT) Up 10.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Goodyear (GT - Free Report) . Shares have added about 10.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Goodyear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Goodyear Q3 Earnings Beat Estimates, Down Y/Y
Goodyear Tire reported third-quarter 2020 adjusted earnings per share of 10 cents against the Zacks Consensus Estimate of a loss of 8 cents. Higher-than-expected net sales of tires from the Europe, Middle East and Africa unit led to the outperformance. Precisely, net sales from the said segment were $1,156 million, surpassing the consensus mark of $1,039 million.
Nonetheless, the bottom line deteriorated from earnings per share of 45 cents recorded in the prior-year quarter due to lower revenues across all segments. Lower industry volume and reduced sales amid the coronavirus pandemic weighed on the firm’s results.
It delivered net revenues of $3,465 million, lower than $3,802 million reported in the year-ago quarter due to reduced volumes and unfavorable currency translations. However, revenues surpassed the Zacks Consensus Estimate of $3,450 million.
For the reported quarter, tire volume was 36.6 million units, down 9% from the year-ago period. Both original equipment unit volume and replacement tire shipments declined 9% from the year-ago quarter owing to lower consumer demand and reduced vehicle production.
Key Takeaways
The Americas segment generated revenues of $1,823 million, which compared unfavorably with $2,049 million in the prior-year period. The segment incurred an operating income of $106 million, lower than $175 million in third-quarter 2019. The year-over-year decline was due to reduced volume and weak factory utilization.
Revenues in the Europe, Middle East and Africa segment were $1,156 million, down from $1,205 million a year ago. The segment’s operating profit declined to $22 million for the quarter under review from $66 million in the prior quarter.
Revenues in the Asia Pacific segment fell 11.3% year over year to $486 million. The segment’s operating profit came in at $34 million for the quarter under review, lower than $53 million in the corresponding period of 2019.
Goodyear had cash and cash equivalents of $1,057 million as of Sep 30, 2020, up from $908 million on Dec 31, 2019. As of Sep 30, 2020, long-term debt and finance leases amounted to $5,708 million, up from $4,753 million on Dec 31, 2019. Cash flow from operating activities summed $581 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -37.09% due to these changes.
VGM Scores
At this time, Goodyear has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goodyear has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Goodyear (GT) Up 10.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Goodyear (GT - Free Report) . Shares have added about 10.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Goodyear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Goodyear Q3 Earnings Beat Estimates, Down Y/Y
Goodyear Tire reported third-quarter 2020 adjusted earnings per share of 10 cents against the Zacks Consensus Estimate of a loss of 8 cents. Higher-than-expected net sales of tires from the Europe, Middle East and Africa unit led to the outperformance. Precisely, net sales from the said segment were $1,156 million, surpassing the consensus mark of $1,039 million.
Nonetheless, the bottom line deteriorated from earnings per share of 45 cents recorded in the prior-year quarter due to lower revenues across all segments. Lower industry volume and reduced sales amid the coronavirus pandemic weighed on the firm’s results.
It delivered net revenues of $3,465 million, lower than $3,802 million reported in the year-ago quarter due to reduced volumes and unfavorable currency translations. However, revenues surpassed the Zacks Consensus Estimate of $3,450 million.
For the reported quarter, tire volume was 36.6 million units, down 9% from the year-ago period. Both original equipment unit volume and replacement tire shipments declined 9% from the year-ago quarter owing to lower consumer demand and reduced vehicle production.
Key Takeaways
The Americas segment generated revenues of $1,823 million, which compared unfavorably with $2,049 million in the prior-year period. The segment incurred an operating income of $106 million, lower than $175 million in third-quarter 2019. The year-over-year decline was due to reduced volume and weak factory utilization.
Revenues in the Europe, Middle East and Africa segment were $1,156 million, down from $1,205 million a year ago. The segment’s operating profit declined to $22 million for the quarter under review from $66 million in the prior quarter.
Revenues in the Asia Pacific segment fell 11.3% year over year to $486 million. The segment’s operating profit came in at $34 million for the quarter under review, lower than $53 million in the corresponding period of 2019.
Goodyear had cash and cash equivalents of $1,057 million as of Sep 30, 2020, up from $908 million on Dec 31, 2019. As of Sep 30, 2020, long-term debt and finance leases amounted to $5,708 million, up from $4,753 million on Dec 31, 2019. Cash flow from operating activities summed $581 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -37.09% due to these changes.
VGM Scores
At this time, Goodyear has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goodyear has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.