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Why Is Cooper Tire (CTB) Down 6.1% Since its Last Earnings Report?

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A month has gone by since the last earnings report for Cooper Tire & Rubber Company (CTB - Free Report) . Shares have lost about 6.1% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CTB due for a breakout? 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 drivers.

Cooper Tire's Q1 Earnings, Revenues Miss Estimates

Cooper Tire & Rubber Co. posted earnings of 16 cents per share in the first quarter of 2018, missing the Zacks Consensus Estimate of 60 cents. The bottom line was also lower than the prior-year quarter’s figure of 57 cents per share. Results were impacted by high manufacturing costs and weak volumes.

Cooper Tire recorded net sales of $601 million, missing the Zacks Consensus Estimate of $643 million. Moreover, the year-ago quarter’s net sales were $643 million as well.

Operating profit was $26 million in the first quarter of 2018, down 54.4% from the year-ago quarter.

Segment Details

Americas Tire Operations registered 8.7% decrease in net sales to $485 million. Operating profit in this segment declined 55.9% to $31 million while operating margin decreased from 13.3% to 6.4%.

International Tire Operations registered 13.6% rise in revenues to $161 million. Operating profit was $7 million, increasing from $3 million in the year-ago quarter. Operating margin rose to 4.6% from 2.1% in the year-ago quarter.

Financial Position

Cooper Tire had cash and cash equivalents of $213 million as of Mar 31, 2018, down from $365 million as of Dec 31, 2017. Capital expenditures increased to $60 million in the first quarter of 2018 from $45 million in the year-ago quarter.

Share Repurchases

In February 2017, Cooper Tire increased the share-repurchase amount by $300 million and extended it till December 2019. During the first quarter of 2018, the company spent $16 million on repurchasing 469,581 shares at a price of $33.15 per share. Between August 2014 and Mar 31, 2018, Cooper Tire brought back 15.2 million shares at an average price of $34.38 per share.

Outlook

The company expects 2018 operating- profit margin guidance to remain similar to the previous guidance of 9-11%.

For 2018, capital expenditures are expected to be $200-$220 million, down from the previous guidance of $215-$235 million. The effective tax rate for the year is expected to be 23-26%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. Last month, the consensus estimate has shifted downward by 45.8% due to these changes.

Cooper Tire & Rubber Company Price and Consensus

 

VGM Scores

At this time, CTB has a poor Growth Score of F, however its Momentum is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise CTB has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.




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