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Goodyear (GT) Q2 Earnings, Revenues Lag Estimates, Fall Y/Y
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The Goodyear Tire & Rubber Company (GT - Free Report) reported 39.7% decrease in adjusted earnings per share to 70 cents in second-quarter 2017 from $1.16 recorded a year ago. Also, earnings missed the Zacks Consensus Estimate of 72 cents. Adjusted net income declined to $189 million from $195 million in second-quarter 2017.
Revenues in the reported quarter were $3.69 billion, missing the Zacks Consensus Estimate of $3.75 billion. Plus, revenues declined from $3.88 billion recorded a year ago.
Tire unit volumes were 37.4 million, down 10% from 2016. Replacement tire shipments dropped 11% while original equipment unit volume declined by 8% year over year due to lower volume sales in Europe, Middle East and Africa and Americas.
Segment operating income dropped to $361 million in the reported quarter from $531 million a year ago.
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise
Revenues at the Americas’ segment declined 3% year over year to $2 billion, primarily due to increased competition. Original equipment unit volume went down 12% year over year. Replacement tire shipments were down 8%.
Segment operating income plunged 27% to $213 million due to higher raw material costs and the impact of lower volume, partially offset by an improved price/mix.
Revenues from the Europe, Middle East and Africa segment were $1.1 billion, down 12% year over year. Revenues were primarily hurt by 16% decrease in tires volume. Original equipment unit volume was down 11% while replacement tire shipments declined 18% year over year. Segment operating income slashed 48% to $77 million, primarily due to high competition and a declining volume, partially offset by better price/mix and cost savings.
Revenues from the Asia-Pacific segment nudged up 3% to $543 million, reflecting an improved pricing of products. Original equipment unit volume inched up 2% while replacement tire shipments dipped 3% year over year. Segment operating income down 21% to $71 million, driven by continued high raw material costs, partly offset by improved product mix.
Financial Position
Goodyear had cash and cash equivalents of $903 million as of Jun 30, 2017, down from $1.1 billion as of Dec 31, 2016. Long-term debt and capital leases amounted to $5.4 billion as of Jun 30, 2017, up from $4.8 billion as of Dec 31, 2016.
In the first half of fiscal 2017, the company recorded a total cash flow of ($185) million from operating activities, which widened from ($67) million, recorded in the same period a year-ago. Also, capital expenditure for the same period, increased to $497 million from $466 million, recorded a year-ago.
Capital Deployment
During the reported quarter, Goodyear repurchased 147,000 shares for $5 million under the previously announced $2.1 billion share repurchase program.
On Jul 13, the board declared a quarterly dividend of 10 cents payable on Sep 1 to shareholders of record on Aug 1.
Outlook
Goodyear anticipates operating income for 2017 to be within the range of $1.6-1.65 billion compared with the previous projection of $2 billion.
Price Performance
Goodyear shares have lost 6.3% in the last one month, thereby underperforming the 2.5% decline of the industry it belongs to.
Zacks Rank & Key Picks
Goodyear currently carries a Zacks Rank #3 (Hold).
Allison Transmission has expected long-term growth rate of 11%.
Volkswagen has expected growth rate of around 17.3% over the long term.
Daimler has expected long-term growth rate of 2.8%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Goodyear (GT) Q2 Earnings, Revenues Lag Estimates, Fall Y/Y
The Goodyear Tire & Rubber Company (GT - Free Report) reported 39.7% decrease in adjusted earnings per share to 70 cents in second-quarter 2017 from $1.16 recorded a year ago. Also, earnings missed the Zacks Consensus Estimate of 72 cents. Adjusted net income declined to $189 million from $195 million in second-quarter 2017.
Revenues in the reported quarter were $3.69 billion, missing the Zacks Consensus Estimate of $3.75 billion. Plus, revenues declined from $3.88 billion recorded a year ago.
Tire unit volumes were 37.4 million, down 10% from 2016. Replacement tire shipments dropped 11% while original equipment unit volume declined by 8% year over year due to lower volume sales in Europe, Middle East and Africa and Americas.
Segment operating income dropped to $361 million in the reported quarter from $531 million a year ago.
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
Segment Details
Revenues at the Americas’ segment declined 3% year over year to $2 billion, primarily due to increased competition. Original equipment unit volume went down 12% year over year. Replacement tire shipments were down 8%.
Segment operating income plunged 27% to $213 million due to higher raw material costs and the impact of lower volume, partially offset by an improved price/mix.
Revenues from the Europe, Middle East and Africa segment were $1.1 billion, down 12% year over year. Revenues were primarily hurt by 16% decrease in tires volume. Original equipment unit volume was down 11% while replacement tire shipments declined 18% year over year. Segment operating income slashed 48% to $77 million, primarily due to high competition and a declining volume, partially offset by better price/mix and cost savings.
Revenues from the Asia-Pacific segment nudged up 3% to $543 million, reflecting an improved pricing of products. Original equipment unit volume inched up 2% while replacement tire shipments dipped 3% year over year. Segment operating income down 21% to $71 million, driven by continued high raw material costs, partly offset by improved product mix.
Financial Position
Goodyear had cash and cash equivalents of $903 million as of Jun 30, 2017, down from $1.1 billion as of Dec 31, 2016. Long-term debt and capital leases amounted to $5.4 billion as of Jun 30, 2017, up from $4.8 billion as of Dec 31, 2016.
In the first half of fiscal 2017, the company recorded a total cash flow of ($185) million from operating activities, which widened from ($67) million, recorded in the same period a year-ago. Also, capital expenditure for the same period, increased to $497 million from $466 million, recorded a year-ago.
Capital Deployment
During the reported quarter, Goodyear repurchased 147,000 shares for $5 million under the previously announced $2.1 billion share repurchase program.
On Jul 13, the board declared a quarterly dividend of 10 cents payable on Sep 1 to shareholders of record on Aug 1.
Outlook
Goodyear anticipates operating income for 2017 to be within the range of $1.6-1.65 billion compared with the previous projection of $2 billion.
Price Performance
Goodyear shares have lost 6.3% in the last one month, thereby underperforming the 2.5% decline of the industry it belongs to.
Zacks Rank & Key Picks
Goodyear currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the auto space are Allison Transmission Holdings (ALSN - Free Report) , Volkswagen AG and Daimler AG , all stocks sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Allison Transmission has expected long-term growth rate of 11%.
Volkswagen has expected growth rate of around 17.3% over the long term.
Daimler has expected long-term growth rate of 2.8%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>