Back to top

Image: Bigstock

What's in the Cards for Cooper Tire (CTB) in Q1 Earnings?

Read MoreHide Full Article

Cooper Tire & Rubber Company is set to report first-quarter 2018 results, before the market opens on Apr 30. Last quarter, the tire manufacturer delivered an earnings miss of 19.4%. In the trailing four quarters, it missed estimates twice while beating the same in the remaining two, with an average positive earnings surprise of 2.8%.

In the last three months, shares of Cooper Tire & Rubber’s have underperformed the industry it belongs to. During the period, the stock has lost 27.6% in comparison with the industry’s decline of 24.7%.

Let's see how things are shaping up after this announcement.

Cooper Tire & Rubber Company Price and EPS Surprise

Factors to Consider

Cooper Tire focuses on developing products with better design and functionality to satisfy the market demand across all regions. In March, the company introduced Mastercraft Glacier Trex tire. The new tire is suitable for passenger cars and crossover vehicles, which will help consumers to manage their automobiles in severe weather conditions by offering superior braking and handling on snow and ice.

Moreover, in order to enhance its logistics infrastructure and improve business operations, the company has been focusing on expanding product distribution network in the United States. At the beginning of February, Cooper Tire announced its decision to open an additional warehouse in Byhalia, MS.

However, Cooper Tire operates in an extremely competitive industry. This makes it exposed to bigger North American peers with greater financial resources. Also, it competes with low-cost producers in Asia, Mexico, South America and Central Europe. If the company fails to improve its operating efficiencies compared with its peers, it might suffer.

The company is also facing rise in capital expenses, primarily due to volatile raw material prices. For 2018, capital expenditures are expected between $215 million and $235 million, higher than $197 million recorded in 2017.

In fourth-quarter 2017, Americas Tire Operations registered 7.1% year-over-year decrease in net sales to $645 million. For first-quarter 2018, the Zacks Consensus Estimate for net sales from Americas Tire Operations is $526 million.

In fourth-quarter 2017, International Tire Operations registered 30.5% year-over-year rise in revenues to $162 million. For first-quarter 2018, the Zacks Consensus Estimate for net sales from International Tire Operations is $156 million.

Earnings Whispers

Our proven model does not conclusively show that Cooper Tire is likely to beat earnings this quarter. This is because, a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Cooper Tire has an Earnings ESP of -7.11% as the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 56 cents and 60 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank of 3. This, combined with its Earnings ESP, makes the surprise prediction difficult. Note that we caution against Rank #4 (Sell) and 5 (Strong Sell) stocks going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering from the same space, with the right combination of elements to outpace earnings estimates this time around:

Cummins Inc. (CMI - Free Report) has an Earnings ESP of +0.48% and is a #3 Ranked player. Its first-quarter 2018 results are slated to be announced on May 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission Holdings, Inc. (ALSN - Free Report) has an Earnings ESP of +3.81% and a Zacks Rank of 2. The company is scheduled to report first-quarter 2018 results on May 1.

American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +3.45% and a Zacks Rank of 3. The company will report first-quarter 2018 results on May 4.

Investor Alert: Breakthroughs Pending

A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.

Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.

Click here to see them >>

Published in