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Goodyear (GT) Q4 Earnings Beat, Revenues Miss Estimates
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The Goodyear Tire & Rubber Company (GT - Free Report) reported a 2.2% increase in adjusted earnings per share to 95 cents in fourth-quarter 2016 from 93 cents recorded a year ago (all excluding special items). Moreover, earnings surpassed the Zacks Consensus Estimate of 87 cents. Adjusted net income declined to $249 million from $257 million in fourth-quarter 2015.
Including special items, the company reported net income of $561 million or $2.14 per share in fourth-quarter 2016. In the year-ago quarter, it recorded net income of $380 million or $1.42 per share.
Revenues in the reported quarter fell 7.9% year over year to $3.74 billion. Sales also missed the Zacks Consensus Estimate of $3.84 billion. The year-over-year decline in the top line can be attributed to deconsolidation of the company’s subsidiary in Venezuela.
Tire unit volumes were 41.1 million, down 2% from the year-ago quarter. Replacement tire shipments dropped 1% while original equipment unit volume declined by 7% year over year due to weakness in the U.S. commercial truck market.
Segment operating income dropped to $479 million in the reported quarter from $480 million a year ago. Segment operating income gained from cost savings, offset by lower price/mix net of raw material costs, lower volume and the deconsolidation of Venezuela.
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise
Goodyear posted a year-over-year rise of 20.5% in earnings to $4 per share for full-year 2016. The figure surpassed the Zacks Consensus Estimate of $3.90. Revenues for 2016 were down 8% to roughly $15.2 billion due to deconsolidation of the company’s subsidiary in Venezuela. The figure also missed the Zacks Consensus Estimate of $15.3 billion.
Segment Details
Revenues at the Americas segment fell 11% year over year to $2.1 billion. The deterioration was due to a 5% decrease in tire unit volumes to 18.7 million units. The decline in unit volumes primarily resulted from the deconsolidation of the Venezuelan subsidiary. Original equipment unit volume went down 12% year over year. Replacement tire shipments were down 3%.
Segment operating income went up 4% to $295 million driven by strong performance in the consumer tire business, which was partially offset by weakness in the commercial truck tire business and the deconsolidation of Venezuela.
Revenues from the Europe, Middle East and Africa segment were $1.1 billion, down 5% year over year. Revenues were primarily hurt by 1% decrease in sales volume and unfavorable currency translation. Original equipment unit volume was down 5% while replacement tire shipments increased 1% year over year. Segment operating income edged down 19% to $81 million, primarily due to lower volume and a reduced price/mix net of raw materials and unfavorable foreign currency translation.
Revenues from the Asia-Pacific segment decreased 2% to $548 million, owing to unfavorable currency translation. Original equipment unit volume dropped 2% while replacement tire shipments rose 3% year over year. Segment operating income improved 7% to $103 million, primarily on higher volume.
Financial Position
Goodyear had cash and cash equivalents of $1.1 billion as of Dec 31, 2016, down from $1.48 billion as of Dec 31, 2015. Long-term debt and capital leases amounted to $5.23 billion as of Dec 31, 2016, down from $5.66 billion as of Dec 31, 2015.
Cash flow from operations amounted to $1.5 billion in 2016 compared with $1.7 billion in the year-ago period. Meanwhile, capital expenditure was $996 million compared with $983 million a year ago.
Capital Deployment
During the reported quarter, Goodyear repurchased 9.8 million shares for $300 million under the previously announced $1.1 billion program. In 2016, the company bought back 16.7 million shares for $500 million.
On Feb 2, 2017, the board of directors also authorized a $1 billion increase in the share repurchase program. With this, the company has a total authorization of $2.1 billion.
Goodyear paid a quarterly dividend of 10 cents per share on Dec 1, 2016. On Feb 1, 2017, the board declared a quarterly dividend of 10 cents payable on Mar 1, 2017.
Guidance
Goodyear anticipates total segment operating income for 2017 to be consistent with the 2016 level. However, the company confirmed its 2020 financial targets and capital allocation plan, which were announced on Sep 15, 2016.
Price Performance
Goodyear outperformed the Zacks categorized Rubber - Tires industry over the last three months. The company’s shares gained 14.2% over this period, compared with a 10.8% rise recorded by the industry.
Zacks Rank
Goodyear currently carries a Zacks Rank #3 (Hold).
Fox Factory has an expected earnings growth rate of around 16.6% for the current year. Penske Automotive has an expected long-term growth rate of 8.2%, while the same for General Motors is pegged at 9.4%.
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Goodyear (GT) Q4 Earnings Beat, Revenues Miss Estimates
The Goodyear Tire & Rubber Company (GT - Free Report) reported a 2.2% increase in adjusted earnings per share to 95 cents in fourth-quarter 2016 from 93 cents recorded a year ago (all excluding special items). Moreover, earnings surpassed the Zacks Consensus Estimate of 87 cents. Adjusted net income declined to $249 million from $257 million in fourth-quarter 2015.
Including special items, the company reported net income of $561 million or $2.14 per share in fourth-quarter 2016. In the year-ago quarter, it recorded net income of $380 million or $1.42 per share.
Revenues in the reported quarter fell 7.9% year over year to $3.74 billion. Sales also missed the Zacks Consensus Estimate of $3.84 billion. The year-over-year decline in the top line can be attributed to deconsolidation of the company’s subsidiary in Venezuela.
Tire unit volumes were 41.1 million, down 2% from the year-ago quarter. Replacement tire shipments dropped 1% while original equipment unit volume declined by 7% year over year due to weakness in the U.S. commercial truck market.
Segment operating income dropped to $479 million in the reported quarter from $480 million a year ago. Segment operating income gained from cost savings, offset by lower price/mix net of raw material costs, lower volume and the deconsolidation of Venezuela.
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise | The Goodyear Tire & Rubber Company Quote
2016 Performance
Goodyear posted a year-over-year rise of 20.5% in earnings to $4 per share for full-year 2016. The figure surpassed the Zacks Consensus Estimate of $3.90. Revenues for 2016 were down 8% to roughly $15.2 billion due to deconsolidation of the company’s subsidiary in Venezuela. The figure also missed the Zacks Consensus Estimate of $15.3 billion.
Segment Details
Revenues at the Americas segment fell 11% year over year to $2.1 billion. The deterioration was due to a 5% decrease in tire unit volumes to 18.7 million units. The decline in unit volumes primarily resulted from the deconsolidation of the Venezuelan subsidiary. Original equipment unit volume went down 12% year over year. Replacement tire shipments were down 3%.
Segment operating income went up 4% to $295 million driven by strong performance in the consumer tire business, which was partially offset by weakness in the commercial truck tire business and the deconsolidation of Venezuela.
Revenues from the Europe, Middle East and Africa segment were $1.1 billion, down 5% year over year. Revenues were primarily hurt by 1% decrease in sales volume and unfavorable currency translation. Original equipment unit volume was down 5% while replacement tire shipments increased 1% year over year. Segment operating income edged down 19% to $81 million, primarily due to lower volume and a reduced price/mix net of raw materials and unfavorable foreign currency translation.
Revenues from the Asia-Pacific segment decreased 2% to $548 million, owing to unfavorable currency translation. Original equipment unit volume dropped 2% while replacement tire shipments rose 3% year over year. Segment operating income improved 7% to $103 million, primarily on higher volume.
Financial Position
Goodyear had cash and cash equivalents of $1.1 billion as of Dec 31, 2016, down from $1.48 billion as of Dec 31, 2015. Long-term debt and capital leases amounted to $5.23 billion as of Dec 31, 2016, down from $5.66 billion as of Dec 31, 2015.
Cash flow from operations amounted to $1.5 billion in 2016 compared with $1.7 billion in the year-ago period. Meanwhile, capital expenditure was $996 million compared with $983 million a year ago.
Capital Deployment
During the reported quarter, Goodyear repurchased 9.8 million shares for $300 million under the previously announced $1.1 billion program. In 2016, the company bought back 16.7 million shares for $500 million.
On Feb 2, 2017, the board of directors also authorized a $1 billion increase in the share repurchase program. With this, the company has a total authorization of $2.1 billion.
Goodyear paid a quarterly dividend of 10 cents per share on Dec 1, 2016. On Feb 1, 2017, the board declared a quarterly dividend of 10 cents payable on Mar 1, 2017.
Guidance
Goodyear anticipates total segment operating income for 2017 to be consistent with the 2016 level. However, the company confirmed its 2020 financial targets and capital allocation plan, which were announced on Sep 15, 2016.
Price Performance
Goodyear outperformed the Zacks categorized Rubber - Tires industry over the last three months. The company’s shares gained 14.2% over this period, compared with a 10.8% rise recorded by the industry.
Zacks Rank
Goodyear currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the auto space include Penske Automotive Group, Inc. (PAG - Free Report) , Fox Factory Holding Corp (FOXF - Free Report) and General Motors Company (GM - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fox Factory has an expected earnings growth rate of around 16.6% for the current year. Penske Automotive has an expected long-term growth rate of 8.2%, while the same for General Motors is pegged at 9.4%.
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In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>