The Goodyear Tire & Rubber Company GT reported adjusted earnings per share of 68 cents compared with 70 cents in the prior-year quarter. The bottom line missed the Zack Consensus Estimate of 76 cents. The company reported net income of $351 million, up from $129 million in the year-ago quarter.
The company delivered net revenues of $3.93 billion, slightly higher than $3.92 billion in the year-ago quarter. The top line was almost in line with the Zacks Consensus Estimate.
During the quarter, tire unit volumes were 40.5 million, up 2% from the year-ago quarter. Replacement tire shipments rose 4% while original equipment unit volume fell 4% from the prior-year quarter.
Segment operating income was $362 million, almost flat year over year.
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise
The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise | The Goodyear Tire & Rubber Company Quote
Revenues in the Americas' segment improved slightly year over year from $2.04 billion to $2.10 billion, which reflects increases in price/mix, increase volume and higher third-party chemical sales. Segment operating income came in at $194 million, nearly flat year over year. Modest decline was due to higher conversion costs, impact of reduced price/mix, unfavorable foreign currency translation and increased cost of raw material.
Revenues at the Europe, Middle East and Africa segment were $1.3 billion, down 2% year over year due to unfavorable foreign currency translation, partially offset by increased volume and favorable price/mix. The segment's operating income increased 23% to $111 million. This was mainly driven by lower raw material costs, favorable price/mix, partially offset by unfavorable foreign currency translation and higher selling, administrative and general (SG&A) expenses.
Revenues at the Asia-Pacific segment declined 7% to $531 million, reflecting a drop in tire volumes and adverse foreign currency translation. The segment's operating income declined to $57 million year over year due to higher SG&A expenses, partially because of higher bad debt expense, lower price/mix and reduced volume.
Goodyear had cash and cash equivalents of $896 million as of Sep 30, 2018, down from $1.04 billion as of Dec 31, 2017. Long-term debt and capital leases amounted to $471 million as of Sep 30, 2018, up from $391 million as of Dec 31, 2017.
As of Sep 30, 2018, the company recorded total cash outflow of $24 million from operating activities in comparison with total outflow $154 million as of Sep 30, 2017. Also, capital expenditure for the period fell to $615 million from $683 million a year ago.
During the reported quarter, Goodyear repurchased 4.2 million shares for $100 million, under the previously announced $2.1-billion share buy-back program.
Since the program's initiation in 2013, the company bought back 52 million shares for $1.5 billion.
Goodyear revised its segment operating income expectations for 2018 to reflect the challenging industry environment. The company expects its segment operating income to exceed $1.3 billion, down from previous guidance of $1.45-$1.5 billion. The revised guidance reflects the impact of higher raw material costs due to headwinds from unfavorable currency translation, soft market conditions in China and economic volatility in Brazil.
Zacks Rank & Stocks to Consider
Goodyear is a Zacks Rank#3 (Hold) company.
A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. ALSN , Advance Auto Parts, Inc. AAP and AutoZone, Inc. AZO , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have risen 12.8%.
Advance Auto Parts has an expected long-term growth rate of 12.3%. Over the past six months, shares of the company have risen 40.3%.
AutoZone has an expected long-term growth rate of 12.2%. Over the past two years, shares of the company have risen 17.8%.
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