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Goodyear (GT) to Report Q3 Earnings: Is a Beat in the Cards?

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The Goodyear Tire & Rubber Company (GT - Free Report) is set to report third-quarter 2017 results on Oct 27, before the market opens.

Last quarter, the tire manufacturer witnessed a negative earnings surprise of 2.78%. Of the trailing four quarters, the company beat estimates in three and missed in one with an average beat of 11.75%.

The long-term EPS growth (three-five years) for the company is currently pegged at 12.4%.

Let us see how things are shaping up for this announcement.

The Goodyear Tire & Rubber Company Price and EPS Surprise

Why a Likely Positive Surprise?

Our proven model shows that Goodyear is likely to beat estimates this quarter with the right combination of two key ingredients.

Zacks ESP: Goodyear has an Earnings ESP of +3.29% as the Most Accurate estimate of 69 cents is pegged above the Zacks Consensus Estimate of 67 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Goodyear carries a Zacks Rank #2 (Buy). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have significantly higher chances of an earnings beat.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What’s Driving Better-than-Expected Results?

Goodyear is investing in projects having high a return rate. Recently, it has announced plans to construct a facility in Luxembourg to be able to use innovative manufacturing process for producing premium tires. An investment of $77 million will be made with the facility owning a capacity to manufacture roughly 500,000 tires annually.

Additionally, the company is launching new innovative products and services to boost sales. The company will be using its expertise to a fleet of semi-autonomous electric cars in a bid to provide wireless sensors for car tires to enhance overall tire management and augment uptime for the fleet.

For the soon-to-be-released quarterly results, the Zacks Consensus Estimate for net sales of Americas, the company’s largest geographical segment (constituting 55.1% of total revenue in second-quarter 2017), is pegged at $2.08 billion. The second quarter’s actual figure for the Americas segment net sales was $2.03 billion.

For the second-largest geographical segment, Europe, Middle East and Africa (EMEA) (30.2%), the Zacks Consensus Estimate for net sales stands at $1.27 billion. The second quarter’s actual figure for the EMEA segment net sales was $1.1 billion.

Price Performance

Goodyear’s stock has lost 5.2% in the last six months comparing favorably the 7.3% decline of the industry it belongs to.



Other Stocks to Consider

Here are some other stocks worth considering from the same space with the right combination of elements to beat on earnings in respective quarters:

Cummins Inc. (CMI - Free Report) has an Earnings ESP of +0.63% and carries a Zacks Rank of 2. The company is expected to report third-quarter 2017 results on Oct 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Horizon Global Corporation has an Earnings ESP of +5.82% and carries a Zacks Rank #3. The company’s third-quarter 2017 financial results are expected to release on Oct 31.

Meritor, Inc. has an Earnings ESP of +2.13% and flaunts a Zacks Rank of 1. The company is expected to release fourth-quarter 2017 results on Nov 15.

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