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Goodyear (GT) Q4 Earnings & Revenues Miss Estimates, Down Y/Y

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The Goodyear Tire & Rubber Company (GT - Free Report) reported adjusted earnings per share of 19 cents in fourth-quarter 2019 compared with 51 cents in the prior-year quarter. Further, its earnings missed the Zack Consensus Estimate of 45 cents. The underperformance stemmed from lower revenues across all of its segments. The company reported adjusted net income of $45 million, down from $120 million in the year-ago quarter.

It delivered net revenues of $3,713 million, lower than $3,876 million reported in the year-ago quarter. Also, its revenues missed the Zacks Consensus Estimate of $3,804 million. The downside was due to lower industry volume and unfavorable foreign currency translation.

In the reported quarter, tire volume was 39.6 million units, down 2% from the year-ago quarter. Original equipment unit volume decreased 10% due to lower global vehicle production, while replacement tire shipments increased slightly from the year-ago quarter.

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


Segments in Detail

Revenues in the Americas segment declined year over year to $2.03 billion from $2.11 billion. The segment’s operating income was $152 million, down from $179 million recorded in fourth-quarter 2018. The year-over-year decline was driven by lower volume and weaker third-party chemical sales.

Revenues in the Europe, Middle East and Africa segment were $1.14 billion, down year over year from $1.21 billion. The segment’s operating income dipped 49% to $38 million. Lower volume along with unfavorable currency translations and higher conversion costs resulted in the weak performance.

Revenues in the Asia Pacific segment decreased 1% to $546 million due to lower sales in other tire-related businesses and unfavorable foreign currency translation. The segment’s operating income declined year over year to $52 million from $54 million amid higher selling, administrative and general expenses, and lower price/mix.

Dividend & Financial Position

The company declared a quarterly dividend of 16 cents a share, payable Mar 2, 2020, to shareholders of record as of Feb 3, 2020.

Goodyear had cash and cash equivalents of $908 million as of Dec 31, 2019, up from $801 million as of Dec 31, 2018. As of Dec 31, 2019, long-term debt and finance leases amounted to $4.75 billion, up from $5.11 billion as of Dec 31, 2018. The debt-to-capital ratio stands at 54%.

Zacks Rank & Stocks to Consider

Currently, the company carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Auto-Tires-Trucks sector include Gentherm Inc THRM, Gentex Corporation GNTX and SPX Corporation SPXC. While Gentherm sports a Zacks Rank #1 (Strong Buy), Gentex Corporation and SPX carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gentherm has a projected earnings growth rate of 20.60% for the ongoing year. Its shares have gained 15.7% over the past year.

Gentex has an estimated earnings growth rate of 6.02% for 2020. The company’s shares have appreciated 57.1% in a year.

SPX has an expected earnings growth rate of 8.09% for the current year. The stock has rallied 62% in the past year.

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