Back to top

Image: Bigstock

Goodyear (GT) Earnings, Revenues Beat Estimates in Q1

Read MoreHide Full Article

The Goodyear Tire & Rubber Company (GT - Free Report) reported 2.8% increase in adjusted earnings per share to 74 cents in first-quarter 2017 from 72 cents recorded a year ago. Moreover, earnings surpassed the Zacks Consensus Estimate of 63 cents. Adjusted net income declined to $189 million from $195 million in first-quarter 2017.

Including special items, the company reported net income of $166 million or 65 cents per share in first-quarter 2017. In the year-ago quarter, it recorded net income of $184 million or 68 cents per share.

Revenues in the reported quarter inched up 0.2% year over year to $3.7 billion. Sales narrowly passed the Zacks Consensus Estimate of $3.69 billion. This is primarily due to the improvement in price and mix as well as higher pricing of third-party chemical sales partially offset by lower tire unit volume.

Tire unit volumes were 40 million, down 4% from 2016. Replacement tire shipments dropped 2% while original equipment unit volume declined by 8% year over year due to lower U.S. auto production.

Segment operating income dropped to $385 million in the reported quarter from $419 million a year ago. The decrease in segment operating income was due to the impact of lower volume and unabsorbed overhead, which were partially offset by favorable price and mix net of raw material costs and net cost-saving actions.

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise

Segment Details

Revenues at the Americas segment improved 0.3% year over year to $1.96 billion. The relatively flat performance in sales primarily resulted from higher chemical and tire pricing as well as favorable foreign currency translation were partially offset by lower tire unit volume. Original equipment unit volume went down 12% year over year. Replacement tire shipments were down 2%.

Segment operating income went down 18% to $214 million due to the impact of unabsorbed overhead and lower volume, which were partially offset by favorable price/mix and lower raw material costs.

Revenues from the Europe, Middle East and Africa segment were $1.2 billion, down 1% year over year. Revenues were primarily hurt by 4% decrease in tires volume and unfavorable currency translation. Original equipment unit volume was down 1% while replacement tire shipments declined 5% year over year. Segment operating income grew 23% to $98 million, primarily due to favorable price/mix net of raw material costs and lower selling, administrative and general expense partially offset by the impact of lower volume.

Revenues from the Asia-Pacific segment increased 3% to $502 million, owing to unfavorable currency translation. Original equipment unit volume dropped 9% while replacement tire shipments rose 7% year over year. Segment operating income down 8% to $73 million, supported by lower income in other tire-related businesses and unfavorable foreign currency translation offset favorable price/mix net of raw materials.

Financial Position

Goodyear had cash and cash equivalents of $1.05 billion as of Mar 31, 2017, down from $1.1 billion as of Mar 31, 2016. Long-term debt and capital leases amounted to $5.7 billion as of Mar 31, 2017, down from $5.23 billion as of Mar 31, 2016.

Cash flow from operations amounted to $286 million in first-quarter 2017 compared with $372 million in the year-ago period. Meanwhile, capital expenditure was $271 million compared with $253 million a year ago.

Capital Deployment

During the reported quarter, Goodyear repurchased 0.7 million shares for $25 million. On Feb 2, the board of directors also authorized a $1 billion increase in the share repurchase program. With this, the company has a total authorization of $2.1 billion.

Goodyear paid a quarterly dividend of 10 cents per share on Mar 31. On Apr 28, the board declared a quarterly dividend of 10 cents payable on Jun 1 to shareholders of record on May 1.

Guidance

Goodyear anticipates total segment operating income for 2017 to be approximately $2 billion, in line with the 2016 figure. Moreover, the company confirmed its 2020 financial targets and capital allocation plan, which were announced on Sep 15, 2016.

Price Performance

Goodyear outperformed the Zacks categorized Rubber - Tires industry over the past one year. The company’s shares gained 22.4% over this period, compared with a 22.3% rise recorded by the industry.



Zacks Rank & Key Picks

Goodyear currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the auto space include Cummins Inc. (CMI - Free Report) , Tata Motors Ltd and Tesla Inc. (TSLA - Free Report) all carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cummins has an expected earnings growth rate of 9.8%.

Tata Motors has an expected earnings growth rate of 27.9%.

Tesla has an expected earnings growth rate of 30%.

Zacks' Hidden Trades

While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?

Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Cummins Inc. (CMI) - free report >>

The Goodyear Tire & Rubber Company (GT) - free report >>

Tesla, Inc. (TSLA) - free report >>

Published in