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Cooper Tire (CTB) to Report Q4 Earnings: Factors at Play

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Cooper Tire & Rubber Company (CTB - Free Report) is set to report fourth-quarter 2020 results, before the market opens on Feb 22. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 92 cents per share on revenues of $747.84 million.

In the last reported quarter, this tire manufacturer delivered higher-than-anticipated earnings on better-than expected contributions from the American and International Tire Operations segments.

Over the trailing four quarters, Cooper Tire surpassed the Zacks Consensus Estimate on all occasions, the average surprise being 106.84%. This is depicted in the graph below:

Trend in Estimate Revisions

The Zacks Consensus Estimate for Cooper Tire’s fourth-quarter earnings per share witnessed an upward revision of three cents to 92 cents in the past 90 days. However, this compares unfavorably with the year-ago quarter’s earnings of $1.02 per share, indicating a 9.8% decline, year on year. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year marginal fall of 0.32%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Cooper Tire this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: Cooper Tire has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cooper Tire, peers of which include Goodyear Tire (GT - Free Report) , Bridgestone Corp (BRDCY - Free Report) and Michelin (MGDDY - Free Report) , currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Consider

With the economy in an unhealthy state and new Covid-19 strains prolonging the second wave of infections in the United States and many countries in Europe, orders from these regions are expected to have been adversely impacted.. Revenues and profits from both segments of the firm might have borne the brunt of coronavirus woes.

Notably, the Zacks Consensus Estimate for the Americas Tire Operations segment’s quarterly net sales is pegged at $656 million, suggesting a fall from the $660 million reported in the previous quarter. Moreover, the consensus mark for operating profit from the said segment is pinned at $77 million, indicating a decline from the $176 million recorded in the previous quarter.
 
The consensus mark for the International Tire Operations segment’s quarterly net sales is pinned at $119 million, calling for a decrease from the last quarter’s $142 million. Moreover, the consensus mark for the segment’s operating profit is pinned at $2.59 million, suggesting a drop from the prior quarter’s $9 million.  

Nonetheless, Cooper Tire’s widening product development, along with new partnerships, is likely to have aided the company’s top and bottom lines during the quarter to be reported.

Further, Cooper Tire is undertaking several initiatives in order to reduce the pandemic-induced financial crisis. This is likely to have aided the company’s margins during the October-December period.

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