Back to top

Image: Bigstock

Cooper Tire (CTB) Down 13.6% Since Last Earnings Report: Can It Rebound?

Read MoreHide Full Article

A month has gone by since the last earnings report for Cooper Tire . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cooper Tire due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Cooper Tire Q4 Earnings Beat Estimates, Revenues Miss

Cooper Tire & Rubber Co. has posted adjusted earnings of 66 cents per share in the fourth quarter of 2018, beating the Zacks Consensus Estimate of 56 cents.

Cooper Tire recorded net sales of $770.5 million, missing the Zacks Consensus Estimate of $773.1 million. However, the top line was higher than the year-ago quarter’s net sales of $757 million.

Operating profit was $24.8 million in the fourth quarter of 2018, down from the year-ago quarter figure of $56.3 million.

Segment Details

Americas Tire Operations registered 3% increase in net sales to $664 million. Operating profit in this segment rose 3.1% to $70 million while operating margin remained unchanged at 10.6%.

International Tire Operations registered 7.8% decline in revenues to $149 million. Operating loss was $33 million against operating income of $7 million in the year-ago quarter. Operating margin was a negative 22.2% against a positive 4.6% in the year-ago quarter.

Financial Position

Cooper Tire had cash and cash equivalents of $356 million as of Dec 31, 2018, down from $372 million as of Dec 31, 2017. Capital expenditure decreased to $49 million in the fourth quarter of 2018 from $54 million in the year-ago quarter.

Outlook

For 2019, Cooper Tire anticipates modest growth in unit volume in comparison with the 2018 figure. It expects operating margin to improve in 2019.

Capital expenditure is expected to be $190-$210 million in 2019. The effective tax rate for the year is expected to be 22-25%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -43.22% due to these changes.

VGM Scores

At this time, Cooper Tire has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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. It's no surprise Cooper Tire has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Published in