Estimates have been rising for
Cooper Tire & Rubber Company
) after the company delivered better than expected fourth quarter
It is a Zacks #2 Rank (Buy).
Based on current consensus estimates, analysts project 53% EPS
growth this year and 28% growth next year. On top of this, the
company pays a dividend that yields a solid 2.5%.
Valuation is attractive too, with shares trading at less than 9x
Cooper manufactures and sell tires around the globe. It is based in
Findlay, Ohio and has a market cap of $1.0 billion.
Solid Fourth Quarter Results
The company delivered better than expected fourth quarter results
on February 27. Earnings per share came in at 51 cents, crushing
the Zacks Consensus Estimate of 39 cents.
Net sales rose 14% to $1.045 billion, ahead of the Zacks Consensus
Estimate of $1.010 billion. This was driven by 16% growth in the
North American Tire division and 10% growth in the International
Rising input costs did squeeze the gross profit margin a bit, as it
declined from 12.2% to 10.9% of net sales. But this was somewhat
offset by lower selling, general and administrative expenses.
Overall, operating income increased a solid 8%.
We have seen a nice bump in 2012 estimates from analysts following
the strong quarter. This has sent the stock to a Zacks #2 Rank
The 2012 Zacks Consensus Estimate is now $1.83, representing 53%
growth over 2011 EPS. The 2013 consensus estimate is currently
$2.36, corresponding with 28% growth.
Looking at the recent analyst reports, many expect Cooper's recent
sales momentum to continue throughout 2012, and that the company
will be able to offset rising raw material costs going forward. And
this should drive solid double-digit EPS growth over the next
couple of years.
In addition to solid growth, the company pays a dividend that
yields a solid 2.5%. It has paid the same 10.5 cent per share
quarterly dividend since 1998.
Valuation looks attractive with shares trading at just 8.8x
12-month forward earnings, a discount to the industry median of
13.4x, and to its 10-year median of 12.7x.
Its price to tangible book ratio of 2.2 is also below the industry
multiple of 2.6.
The Bottom Line
With rising estimates, solid growth prospects, a steady 2.5%
dividend yield and attractive valuation, Cooper Tire offers a lot
Todd Bunton is the Growth & Income Stock Strategist for
and Co-Editor of the
Reitmeister Value Investor
COOPER TIRE (
): Free Stock Analysis Report
To read this article on Zacks.com click here.