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Goodyear (GT) Beats on Q2 Earnings, Misses Sales, Lowers View
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The Goodyear Tire & Rubber Company (GT - Free Report) reported adjusted earnings per share of 62 cents, down from 70 cents in the prior-year quarter. The bottom line surpassed the Zack Consensus Estimate of 56 cents. The company reported net income of $157 million, up from $147 million in the year-ago quarter.
The company delivered net revenues of $3.84 billion, higher than $3.70 billion in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $3.9 billion.
During the quarter, tire unit volumes were 39 million, up 4% from the year-ago quarter’s figure. Replacement tire shipments rose 5% and original equipment unit volume rose 3% from the prior-year quarter’s tally.
Segment operating income dropped to $324 million in the reported quarter from $369 million a year ago.
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise
Revenues in the Americas’ segment declined slightly year over year from $2.03 billion to $2.02 billion, which reflects a reduced price/mix and unfavorable foreign currency translation. Segment operating income plunged 29% to $154 million, due to higher raw material costs and lower price/mix.
Revenues in the Europe, Middle East and Africa segment were $1.3 billion, up 13% year over year. The upside was mainly driven by increased volume. The segment’s operating income increased 25% to $100 million. This was mainly driven by favorable price/mix, increased sales volume, partly offset by higher raw material costs.
Revenues from the Asia-Pacific segment rose 4% to $563 million, reflecting an improved price/mix and higher tire volumes.
The segment’s operating income declined to $70 million year over year, due to a lower price/mix, which more than offset gains from higher volume.
Financial Position
Goodyear had cash and cash equivalents of $975 million as of Jun 30, 2018, down from $1.04 billion as of Dec 31, 2017. Long-term debt and capital leases amounted to $5.7 billion as of Jun 30, 2018, up from $5.08 billion as of Dec 31, 2017.
As of Jun 30, 2018, the company recorded total cash outflow of $84 million from operating activities in comparison with total outflow $185 million as of Jun 30, 2017. Also, capital expenditure for the period fell to $442 million from $497 million a year ago.
Capital Deployment
During the reported quarter, Goodyear repurchased 3 million shares for $75 million, under the previously announced $2.1 billion share repurchase program.
Since the program’s initiation in 2013, the company repurchased 48 million shares for $1.4 billion.
Outlook
Goodyear lowered its 2018 segment operating income guidance to the range of $1.45-$1.5 billion (down from $1.8-$1.9 billion expected earlier). The revised guidance reflects a $70 million headwind due to soft market conditions in China, a $130 million increase in raw material costs and unfavorable foreign currency swing of $60 million.
Oshkosh has an expected long-term growth rate of 18.3%. Over the past year, shares of the company have moved up 7.3%.
AB Volvo has an expected long-term growth rate of 15%. Over the past year, shares of the company have gained 2.3%.
Fox Factory has an expected long-term growth rate of 15.8%. Shares of the company have risen 30.2% over the past year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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Goodyear (GT) Beats on Q2 Earnings, Misses Sales, Lowers View
The Goodyear Tire & Rubber Company (GT - Free Report) reported adjusted earnings per share of 62 cents, down from 70 cents in the prior-year quarter. The bottom line surpassed the Zack Consensus Estimate of 56 cents. The company reported net income of $157 million, up from $147 million in the year-ago quarter.
The company delivered net revenues of $3.84 billion, higher than $3.70 billion in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of $3.9 billion.
During the quarter, tire unit volumes were 39 million, up 4% from the year-ago quarter’s figure. Replacement tire shipments rose 5% and original equipment unit volume rose 3% from the prior-year quarter’s tally.
Segment operating income dropped to $324 million in the reported quarter from $369 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 in the Americas’ segment declined slightly year over year from $2.03 billion to $2.02 billion, which reflects a reduced price/mix and unfavorable foreign currency translation. Segment operating income plunged 29% to $154 million, due to higher raw material costs and lower price/mix.
Revenues in the Europe, Middle East and Africa segment were $1.3 billion, up 13% year over year. The upside was mainly driven by increased volume. The segment’s operating income increased 25% to $100 million. This was mainly driven by favorable price/mix, increased sales volume, partly offset by higher raw material costs.
Revenues from the Asia-Pacific segment rose 4% to $563 million, reflecting an improved price/mix and higher tire volumes.
The segment’s operating income declined to $70 million year over year, due to a lower price/mix, which more than offset gains from higher volume.
Financial Position
Goodyear had cash and cash equivalents of $975 million as of Jun 30, 2018, down from $1.04 billion as of Dec 31, 2017. Long-term debt and capital leases amounted to $5.7 billion as of Jun 30, 2018, up from $5.08 billion as of Dec 31, 2017.
As of Jun 30, 2018, the company recorded total cash outflow of $84 million from operating activities in comparison with total outflow $185 million as of Jun 30, 2017. Also, capital expenditure for the period fell to $442 million from $497 million a year ago.
Capital Deployment
During the reported quarter, Goodyear repurchased 3 million shares for $75 million, under the previously announced $2.1 billion share repurchase program.
Since the program’s initiation in 2013, the company repurchased 48 million shares for $1.4 billion.
Outlook
Goodyear lowered its 2018 segment operating income guidance to the range of $1.45-$1.5 billion (down from $1.8-$1.9 billion expected earlier). The revised guidance reflects a $70 million headwind due to soft market conditions in China, a $130 million increase in raw material costs and unfavorable foreign currency swing of $60 million.
Zacks Rank & Key Picks
Goodyear carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Oshkosh Corp. (OSK - Free Report) , AB Volvo (VLVLY - Free Report) and Fox Factory Holding Corp. (FOXF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oshkosh has an expected long-term growth rate of 18.3%. Over the past year, shares of the company have moved up 7.3%.
AB Volvo has an expected long-term growth rate of 15%. Over the past year, shares of the company have gained 2.3%.
Fox Factory has an expected long-term growth rate of 15.8%. Shares of the company have risen 30.2% over the past year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>