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GT

Goodyear Tire & Rubber NasdaqGS:GT Stock Report

Last Price

US$15.07

Market Cap

US$4.3b

7D

7.8%

1Y

-1.6%

Updated

17 Aug, 2022

Data

Company Financials +
GT fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance4/6
Financial Health1/6
Dividends0/6

GT Stock Overview

The Goodyear Tire & Rubber Company, together with its subsidiaries, develops, manufactures, distributes, and sells tires and related products and services worldwide.

Goodyear Tire & Rubber Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Goodyear Tire & Rubber
Historical stock prices
Current Share PriceUS$15.07
52 Week HighUS$24.89
52 Week LowUS$10.33
Beta1.88
1 Month Change38.13%
3 Month Change29.02%
1 Year Change-1.57%
3 Year Change29.47%
5 Year Change-49.38%
Change since IPO-33.58%

Recent News & Updates

Aug 08
Should You Be Adding Goodyear Tire & Rubber (NASDAQ:GT) To Your Watchlist Today?

Should You Be Adding Goodyear Tire & Rubber (NASDAQ:GT) To Your Watchlist Today?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story...

Aug 01

Goodyear Tire: An Illusory Bargain

Goodyear is approximately fairly priced based upon my estimates of its normalized post-pandemic FCF. Management's projection for earnings and FCF is only readily achievable with an expansion in domestic market share. The potential for outsized gains on GT stock is largely premised on management's ability to revert its historically poor operating performance. Investment Thesis Many have posited that Goodyear Tire (GT) is incredibly undervalued at present levels when pre-pandemic normalized earnings are taken into account. In addition, the recent Cooper Tire acquisition is set to contribute to the company’s earnings. However, when one takes into account the > $1.5 billion in debt incurred during the pandemic to undertake the Cooper Tire acquisition and to ensure liquidity needs were met, one may begin to question if the company’s already poor balance sheet can handle such additional debt. In addition, GT was in decline before the pandemic, with consecutively lower revenue, earnings, and FCF annually. Given these risks and the company’s current market capitalization, it is my opinion that Goodyear Tire is fairly valued at present levels. Background The Goodyear Tire & Rubber Company is an international leader in tire manufacturing, with operations in most regions around the world. Since the stock’s peak in 2017 at a share price of > $35, its stock has declined to around $12. The driver of these poor results has predominantly been poor operating performance. However, on June 7, 2021, GT acquired Cooper Tire ((CTB)) for an enterprise value of $2.5 billion. Combining GT and CTB revenues, the new company will produce $17.5 billion in revenue according to GT’s management. With the acquisition of Cooper Tires, GT will solidify its position as the third-largest tire manufacturer by revenue in the world. With the acquisition of Cooper and a rebound from the pandemic, the company’s earnings rebounded to $764 million and its revenue increased approximately 42% to $17.48 billion. Prior to the acquisition of CTB and the coronavirus pandemic, GT’s revenue had been declining by 2.7% a year from 2016 to 2019. In addition, its earnings had declined from $1.26 billion in 2016 to a loss of $311 million in 2019. The pandemic exacerbated the company’s woes and the company posted a loss of $1.25 billion in 2020. However, FCF remained positive during the pandemic and even increased by 7%. The company’s normalized pre-pandemic FCF was incredibly volatile but averaged approximately $345 million. Cooper Tire Acquisition Prior to the acquisition, Goodyear was the third-largest tire company. After its acquisition of Cooper Tire, the world’s 13th largest tire company, it will solidify its position as the world’s third largest tire company. The combined company will have a total of $17.5 billion in revenue, $1 billion in operating income, and a 5.7% operating margin. Global Tire Market Ranking by Revenue (Cooper Tire Acquisition Presentation) Cooper Tire is a leading tire company in North America in particular, being its fifth-largest manufacturer, but it also maintains a global presence. In fact, 18% of its sales occur in Europe and Asia, with the remaining 82% of revenue from the Americas. This is important as the US tire industry’s growth is much slower than emerging markets’ tire industries. Independent from GT, Cooper Tire has $2.8 billion in revenue and 10,000 employees. Goodyear’s management claims its FCF is $437 million, although my estimation is $345 million, and Cooper’s FCF is approximately $88 million according to Goodyear management. By these estimates, the combined FCF of the two entities would be $525 million. Management estimates that the cost synergies from the acquisition will approximate $165 million, leaving the combined entity with $690 million in FCF per year. Using my conservative estimate of Goodyear’s present FCF, this figure would be $598 million. Therefore, even when the dilution of 46.06 million shares is taken into account, this acquisition was still immediately accretive to Goodyear’s shareholders and still leaves potential upside when future cost synergies are taken into account. Pro Forma Company Highlights (Cooper Tire Acquisition Presentation) Industry Prospects The North American tire market shrunk in 2020 largely due to Covid. However, for 2021-2026, the North American tire market is expected to grow at a CAGR of 1.9% according to Orion Market Research. While this moderate growth may seem satisfactory for a company trading at a normalized FCF multiple (based on my estimates) of < 10, its revenue growth (excluding the acquisition of Cooper Tire) has been nonexistent. This revenue trajectory may revert itself or eventually stagnate, conservative investors cannot solely rely on mean reversion to anticipate future operating results. This is why it is crucial that Goodyear maintain and expand its sales internationally. The anticipated CAGR for the global tire market is 4.2%, making GT’s international operations poised for growth. Given that the sales from outside the Americas will constitute 42% of the combined entities’ revenue, it seems a reasonable assumption that as GT’s international sales continue to increase relative to its domestic revenue, revenue stabilization and potential growth may materialize. This would indubitably lead to multiple expansion for the beleaguered stock. Pro Forma Post-Acquisition Sales (Cooper Tire Acquisition Presentation) Balance Sheet

Shareholder Returns

GTUS Auto ComponentsUS Market
7D7.8%9.0%4.5%
1Y-1.6%-20.5%-8.9%

Return vs Industry: GT exceeded the US Auto Components industry which returned -20.5% over the past year.

Return vs Market: GT exceeded the US Market which returned -8.9% over the past year.

Price Volatility

Is GT's price volatile compared to industry and market?
GT volatility
GT Average Weekly Movement7.7%
Auto Components Industry Average Movement8.0%
Market Average Movement7.6%
10% most volatile stocks in US Market16.8%
10% least volatile stocks in US Market3.1%

Stable Share Price: GT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: GT's weekly volatility (8%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
189872,000Rich Kramerhttps://www.goodyear.com

The Goodyear Tire & Rubber Company, together with its subsidiaries, develops, manufactures, distributes, and sells tires and related products and services worldwide. It offers various lines of tires for automobiles, trucks, buses, aircraft, motorcycles, earthmoving equipment, and mining and industrial equipment under the Goodyear, Cooper, Dunlop, Kelly, Debica, Sava, Fulda, Mastercraft, Roadmaster, and various other house brands, as well as under the private-label brands. The company also retreads truck, aviation, and off-the-road tires; manufactures and sells tread rubber and other tire retreading materials; sells chemical and natural rubber products; and provides automotive and commercial truck maintenance and repair services, and miscellaneous other products and services.

Goodyear Tire & Rubber Fundamentals Summary

How do Goodyear Tire & Rubber's earnings and revenue compare to its market cap?
GT fundamental statistics
Market CapUS$4.26b
Earnings (TTM)US$947.00m
Revenue (TTM)US$20.11b

4.5x

P/E Ratio

0.2x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
GT income statement (TTM)
RevenueUS$20.11b
Cost of RevenueUS$16.00b
Gross ProfitUS$4.11b
Other ExpensesUS$3.16b
EarningsUS$947.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.35
Gross Margin20.43%
Net Profit Margin4.71%
Debt/Equity Ratio152.4%

How did GT perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is GT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for GT?

Other financial metrics that can be useful for relative valuation.

GT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.6x
Enterprise Value/EBITDA6x
PEG Ratio1.6x

Price to Earnings Ratio vs Peers

How does GT's PE Ratio compare to its peers?

GT PE Ratio vs Peers
The above table shows the PE ratio for GT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average24x
VC Visteon
42.9x35.6%US$3.5b
DORM Dorman Products
23.8x15.4%US$3.3b
FOXF Fox Factory Holding
24.7x16.6%US$4.5b
ADNT Adient
4.4x42.9%US$3.5b
GT Goodyear Tire & Rubber
4.5x2.7%US$4.3b

Price-To-Earnings vs Peers: GT is good value based on its Price-To-Earnings Ratio (4.5x) compared to the peer average (24x).


Price to Earnings Ratio vs Industry

How does GT's PE Ratio compare vs other companies in the US Auto Components Industry?

Price-To-Earnings vs Industry: GT is good value based on its Price-To-Earnings Ratio (4.5x) compared to the US Auto Components industry average (21.9x)


Price to Earnings Ratio vs Fair Ratio

What is GT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

GT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio4.5x
Fair PE Ratio15.3x

Price-To-Earnings vs Fair Ratio: GT is good value based on its Price-To-Earnings Ratio (4.5x) compared to the estimated Fair Price-To-Earnings Ratio (15.3x).


Share Price vs Fair Value

What is the Fair Price of GT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: GT ($15.07) is trading below our estimate of fair value ($80.08)

Significantly Below Fair Value: GT is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Goodyear Tire & Rubber forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


2.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GT's forecast earnings growth (2.7% per year) is above the savings rate (1.9%).

Earnings vs Market: GT's earnings (2.7% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: GT's earnings are forecast to grow, but not significantly.

Revenue vs Market: GT's revenue (2.1% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: GT's revenue (2.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GT's Return on Equity is forecast to be low in 3 years time (14.6%).


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Past Performance

How has Goodyear Tire & Rubber performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-19.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: GT has high quality earnings.

Growing Profit Margin: GT's current net profit margins (4.7%) are higher than last year (1%).


Past Earnings Growth Analysis

Earnings Trend: GT's earnings have declined by 19.5% per year over the past 5 years.

Accelerating Growth: GT's earnings growth over the past year (576.4%) exceeds its 5-year average (-19.5% per year).

Earnings vs Industry: GT earnings growth over the past year (576.4%) exceeded the Auto Components industry -6.3%.


Return on Equity

High ROE: GT's Return on Equity (17.9%) is considered low.


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Financial Health

How is Goodyear Tire & Rubber's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: GT's short term assets ($9.2B) exceed its short term liabilities ($7.1B).

Long Term Liabilities: GT's short term assets ($9.2B) do not cover its long term liabilities ($10.4B).


Debt to Equity History and Analysis

Debt Level: GT's net debt to equity ratio (129%) is considered high.

Reducing Debt: GT's debt to equity ratio has increased from 118.2% to 152.4% over the past 5 years.

Debt Coverage: GT's debt is not well covered by operating cash flow (7.4%).

Interest Coverage: GT's interest payments on its debt are not well covered by EBIT (2.5x coverage).


Balance Sheet


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Dividend

What is Goodyear Tire & Rubber current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


0.28%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate GT's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate GT's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if GT's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if GT's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: GT is not paying a notable dividend for the US market.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as GT has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

4.4yrs

Average management tenure


CEO

Rich Kramer (58 yo)

12.33yrs

Tenure

US$21,415,578

Compensation

Mr. Richard J. Kramer, also known as Rich, serves as the Member of Executive Advisory Board at TuSimple Holdings Inc. since April 2021. He has been Chairman, Chief Executive Officer and President of The Go...


CEO Compensation Analysis

Compensation vs Market: Rich's total compensation ($USD21.42M) is above average for companies of similar size in the US market ($USD6.57M).

Compensation vs Earnings: Rich's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: GT's management team is considered experienced (4.4 years average tenure).


Board Members

Experienced Board: GT's board of directors are considered experienced (9.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

The Goodyear Tire & Rubber Company's employee growth, exchange listings and data sources


Key Information

  • Name: The Goodyear Tire & Rubber Company
  • Ticker: GT
  • Exchange: NasdaqGS
  • Founded: 1898
  • Industry: Tires and Rubber
  • Sector: Automobiles
  • Implied Market Cap: US$4.262b
  • Shares outstanding: 282.80m
  • Website: https://www.goodyear.com

Number of Employees


Location

  • The Goodyear Tire & Rubber Company
  • 200 Innovation Way
  • Akron
  • Ohio
  • 44316-0001
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/17 00:00
End of Day Share Price2022/08/17 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.