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Cooper Tire (CTB) Tops Q3 Earnings, Revenues Lag Estimates
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Cooper Tire & Rubber Company reported third-quarter 2019 adjusted earnings per share of 58 cents, down from the $1.07 recorded in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of 47 cents. This decline resulted from lower-than-anticipated revenues from both American and International Tire operations. Precisely, the firm reported revenues of $602 million and $132 million from American and International Tire operations, lagging the Zacks Consensus Estimates of $631 million and $153 million, respectively.
The company’s net sales declined 4.5% year over year to $704 million. This downside stemmed from unfavourable foreign-currency impact and lower unit volumes, partly offset by improvements in price/mix. The reported figure also missed the Zacks Consensus Estimate of $732 million.
Gross profit amounted to $114.4 million, down from the $139.9 million recorded in the prior-year quarter. Additionally, operating profit came in at $52.8 million, significantly down from the year-earlier quarter’s $81.2. Higher costs related to new tariffs on products imported into the United States from China dampened the company’s profitability during the reported quarter.
Segment Details
Net sales in the Americas Tire Operations declined 4.3% year over year to $602 million. Operating profit in the segment decreased 22.2% to $68 million due to increase in product liability, SG&A and manufacturing costs, along with new and incremental tariffs, this year. Further, operating margin was 11.3% compared with 13.9% in the prior-year quarter.
Revenues in the International Tire Operations declined 18.6% to $132 million. Operating loss was $5 million as against operating income of $6 million recorded in the year-ago quarter. Operating margin was a negative 3.7% as against a positive 3.7% reported in the prior-year quarter. The segment countered challenges from lower intercompany shipments, and higher restructuring and manufacturing costs, among other costs.
The firm announced a quarterly dividend of 10.5 cents a share, payable on Dec 27, to shareholders of record on Dec 2, 2019. Notably, this represents the 191st consecutive quarterly dividend paid by the company.
At the end of the third quarter, Cooper Tire had cash and cash equivalents of $137 million compared with the $209 million recorded in the year-ago quarter. Capital expenditures flared up to $50 million, from the year-ago quarter’s $46 million. At the end of the third quarter, the company invested $49 million in its new joint venture (JV) with Sailun Vietnam.
As of Sep 30, 2019, long-term debt and finance leases amounted to $121 million, down from $295 million as of Sep 30, 2018. The debt-to-capital ratio stands at 25.08%.
Outlook
The company projects its operating margin to improve sequentially in the fourth quarter of 2019 on the back of upbeat trends in pricing, mix and raw materials. The full-year operating profit margin is projected at 5.9%, suggesting a year-over increase. Capital expenditure is expected in the $180-$200 million band.
The company expects effective tax rate, excluding significant discrete items, in the range of 23% to 26%. Charges related to the Melksham, the U.K. restructuring are estimated in the $8-$10 million range.
Zacks Rank & Stocks to Consider
Currently, Cooper Tire carries a Zacks Rank #4 (Sell).
BRP has an expected earnings growth rate of 18.49% for 2019. The company’s shares have rallied 15.9% in the past year.
Aaron's has an estimated earnings growth rate of 17.56% for the ongoing year. The company’s shares have surged roughly 74.9% in a year’s time.
Alamos Gold has a projected earnings growth rate of a whopping 340% for the current year. Its shares have gained around 20.4% over the past year.
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Cooper Tire (CTB) Tops Q3 Earnings, Revenues Lag Estimates
Cooper Tire & Rubber Company reported third-quarter 2019 adjusted earnings per share of 58 cents, down from the $1.07 recorded in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of 47 cents. This decline resulted from lower-than-anticipated revenues from both American and International Tire operations. Precisely, the firm reported revenues of $602 million and $132 million from American and International Tire operations, lagging the Zacks Consensus Estimates of $631 million and $153 million, respectively.
The company’s net sales declined 4.5% year over year to $704 million. This downside stemmed from unfavourable foreign-currency impact and lower unit volumes, partly offset by improvements in price/mix. The reported figure also missed the Zacks Consensus Estimate of $732 million.
Gross profit amounted to $114.4 million, down from the $139.9 million recorded in the prior-year quarter. Additionally, operating profit came in at $52.8 million, significantly down from the year-earlier quarter’s $81.2. Higher costs related to new tariffs on products imported into the United States from China dampened the company’s profitability during the reported quarter.
Segment Details
Net sales in the Americas Tire Operations declined 4.3% year over year to $602 million. Operating profit in the segment decreased 22.2% to $68 million due to increase in product liability, SG&A and manufacturing costs, along with new and incremental tariffs, this year. Further, operating margin was 11.3% compared with 13.9% in the prior-year quarter.
Revenues in the International Tire Operations declined 18.6% to $132 million. Operating loss was $5 million as against operating income of $6 million recorded in the year-ago quarter. Operating margin was a negative 3.7% as against a positive 3.7% reported in the prior-year quarter. The segment countered challenges from lower intercompany shipments, and higher restructuring and manufacturing costs, among other costs.
Cooper Tire & Rubber Company Price and Consensus
Cooper Tire & Rubber Company price-consensus-chart | Cooper Tire & Rubber Company Quote
Dividend & Financial Position
The firm announced a quarterly dividend of 10.5 cents a share, payable on Dec 27, to shareholders of record on Dec 2, 2019. Notably, this represents the 191st consecutive quarterly dividend paid by the company.
At the end of the third quarter, Cooper Tire had cash and cash equivalents of $137 million compared with the $209 million recorded in the year-ago quarter. Capital expenditures flared up to $50 million, from the year-ago quarter’s $46 million. At the end of the third quarter, the company invested $49 million in its new joint venture (JV) with Sailun Vietnam.
As of Sep 30, 2019, long-term debt and finance leases amounted to $121 million, down from $295 million as of Sep 30, 2018. The debt-to-capital ratio stands at 25.08%.
Outlook
The company projects its operating margin to improve sequentially in the fourth quarter of 2019 on the back of upbeat trends in pricing, mix and raw materials. The full-year operating profit margin is projected at 5.9%, suggesting a year-over increase. Capital expenditure is expected in the $180-$200 million band.
The company expects effective tax rate, excluding significant discrete items, in the range of 23% to 26%. Charges related to the Melksham, the U.K. restructuring are estimated in the $8-$10 million range.
Zacks Rank & Stocks to Consider
Currently, Cooper Tire carries a Zacks Rank #4 (Sell).
A few better-ranked stocks worth considering are BRP Inc. (DOOO - Free Report) , sporting a Zacks Rank #1 (Strong Buy), Aaron's, Inc. (AAN - Free Report) and Alamos Gold Inc. (AGI - Free Report) , both carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BRP has an expected earnings growth rate of 18.49% for 2019. The company’s shares have rallied 15.9% in the past year.
Aaron's has an estimated earnings growth rate of 17.56% for the ongoing year. The company’s shares have surged roughly 74.9% in a year’s time.
Alamos Gold has a projected earnings growth rate of a whopping 340% for the current year. Its shares have gained around 20.4% over the past year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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