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Goodyear (GT) Up 9.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Goodyear (GT - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Goodyear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Goodyear Q4 Earnings Beat Estimates
Goodyear delivered fourth-quarter 2023 adjusted EPS of 47 cents, surpassing the Zacks Consensus Estimate of 33 cents and increasing from 7 cents reported in the year-ago quarter.
The company generated net revenues of $5.12 billion, falling 4.8% on a year-over-year basis and missing the Zacks Consensus Estimate of $5.35 billion due to lower replacement volume & third-party chemical sales.
In the reported quarter, tire volume was 45.4 million units, down 3.8% from the year-ago period's levels.
Segmental Performance
In the reported quarter, the Americas segment generated revenues of $3.1 billion, 9.8% lower than the prior-year period's levels and lagging our estimate of $3.34 billion due to lower volume. The segment registered an operating income of $309 million, which increased 10.8% from the year-ago period's figures. The operating margin benefited from stronger performance in the chemical business. The figure also surpassed our expectation of $232.6 million.
Revenues in the Europe, Middle East and Africa segment were $1.4 billion, up 2.6% from the year-ago period's levels, driven by an increase in revenue per tire of 2%. The figure also surpassed our estimate of $1.39 billion. The operating income for the segment was $6 million in the quarter against an operating loss of $80 million in the year-ago period. The figure, however, lagged our estimate of an operating income of $18.3 million.
Revenues in the Asia Pacific segment rose 6.6% year over year to $650 million due to an increase of 10% in tire volume and surpassed our estimate of $603.5 million. The segment’s operating profit was $68 million, up 83.8% from the year-ago figure, owing to an increase in sales volume.
Financial Position
Selling, general & administrative expenses rose to $769 million from $697 million in the year-ago period.
Goodyear had cash and cash equivalents of $902 million as of Dec 31, 2023, down from $1.23 billion as of Dec 31, 2022.
Long-term debt and finance leases amounted to $6.83 billion as of Dec 31, 2023, down from $7.27 billion as of Dec 31, 2022.
Capital expenditure in the quarter was $1.05 billion, down from $1.06 billion in the year-ago quarter.
2024 Outlook
For the first half of 2024, the company anticipates raw material costs, excluding Goodyear Forward, to decrease $375 million year over year.
Capital expenditures are expected in the range of $1.2-$1.3 billion.
Interest expenses are estimated between $520 million and $540 million. Depreciation and amortization is expected to be $1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -87.7% due to these changes.
VGM Scores
At this time, Goodyear has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goodyear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Goodyear (GT) Up 9.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Goodyear (GT - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Goodyear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Goodyear Q4 Earnings Beat Estimates
Goodyear delivered fourth-quarter 2023 adjusted EPS of 47 cents, surpassing the Zacks Consensus Estimate of 33 cents and increasing from 7 cents reported in the year-ago quarter.
The company generated net revenues of $5.12 billion, falling 4.8% on a year-over-year basis and missing the Zacks Consensus Estimate of $5.35 billion due to lower replacement volume & third-party chemical sales.
In the reported quarter, tire volume was 45.4 million units, down 3.8% from the year-ago period's levels.
Segmental Performance
In the reported quarter, the Americas segment generated revenues of $3.1 billion, 9.8% lower than the prior-year period's levels and lagging our estimate of $3.34 billion due to lower volume. The segment registered an operating income of $309 million, which increased 10.8% from the year-ago period's figures. The operating margin benefited from stronger performance in the chemical business. The figure also surpassed our expectation of $232.6 million.
Revenues in the Europe, Middle East and Africa segment were $1.4 billion, up 2.6% from the year-ago period's levels, driven by an increase in revenue per tire of 2%. The figure also surpassed our estimate of $1.39 billion. The operating income for the segment was $6 million in the quarter against an operating loss of $80 million in the year-ago period. The figure, however, lagged our estimate of an operating income of $18.3 million.
Revenues in the Asia Pacific segment rose 6.6% year over year to $650 million due to an increase of 10% in tire volume and surpassed our estimate of $603.5 million. The segment’s operating profit was $68 million, up 83.8% from the year-ago figure, owing to an increase in sales volume.
Financial Position
Selling, general & administrative expenses rose to $769 million from $697 million in the year-ago period.
Goodyear had cash and cash equivalents of $902 million as of Dec 31, 2023, down from $1.23 billion as of Dec 31, 2022.
Long-term debt and finance leases amounted to $6.83 billion as of Dec 31, 2023, down from $7.27 billion as of Dec 31, 2022.
Capital expenditure in the quarter was $1.05 billion, down from $1.06 billion in the year-ago quarter.
2024 Outlook
For the first half of 2024, the company anticipates raw material costs, excluding Goodyear Forward, to decrease $375 million year over year.
Capital expenditures are expected in the range of $1.2-$1.3 billion.
Interest expenses are estimated between $520 million and $540 million. Depreciation and amortization is expected to be $1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -87.7% due to these changes.
VGM Scores
At this time, Goodyear has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goodyear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.