Cooper Tire (CTB) Q4 Earnings: Stock Set to Disappoint?

Cooper Tire & Rubber Co.CTB is set to report fourth-quarter 2016 results before the markets opens on Feb 17. In the last quarter, this tire manufacturer posted a positive earnings surprise of 2.97%.

Let's see how things are shaping up for this announcement.

Cooper Tire & Rubber Company Price and EPS Surprise

Cooper Tire & Rubber Company Price and EPS Surprise | Cooper Tire & Rubber Company Quote

Factors to Consider

Cooper Tire is exposed to volatility in commodity costs, which can impact profitability. Commodities with highly volatile prices include natural rubber, chemicals, carbon black, steel reinforcements and synthetic rubber. Cooper Tire expects raw material costs in the fourth quarter to increase modestly from the third quarter. This can increase Cooper Tire's production costs and may affect margins adversely.

The company is also faced with currency headwinds (as seen in the third quarter), which may continue to weigh on its sales in the to-be-reported quarter.

Cooper Tire has underperformed the Zacks categorized Rubber-Tires industry over the last three months. The company's share price rose 1.3% over this period compared to a 11.9% gain recorded by the industry.

Nevertheless, Cooper Tire continues to develop great products with superior design and functionality to satisfy the market demand in all regions. The company's focus on improving its business operations has also helped improve earnings. It is also focusing on expansion in Latin America. The company has been developing products specifically for the region and even opened a new sales office in Sao Paulo, Brazil in 2016.

Cooper Tire expects operating margin, excluding the impact of acquisitions and non-cash pension settlement charges, to increase marginally in 2016 from 11.9% recorded in 2015. The company also expects global unit volumes to increase in the fourth quarter.

Earnings Whispers

Our proven model does not conclusively show that Cooper Tire is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Earnings ESP for Cooper Tire is currently pegged at -1.08%, as the Most Accurate estimate stands at 92 cents per share while the Zacks Consensus Estimate is pegged at 93 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Cooper Tire carries a Zacks Rank #4 (Sell). It must be noted that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Spartan Motors, Inc. SPAR , which will report fourth-quarter 2016 results on Feb 23, has an Earnings ESP of +50% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Visteon Corporation VC has an Earnings ESP of +5.93% and a Zacks Rank #3. The company will report fourth-quarter 2016 financial numbers on Feb 23.

Cooper-Standard Holdings Inc. CPS has an Earnings ESP of +7.33% and a Zacks Rank #3. The company is slated to release fourth-quarter 2016 results on Feb 16.

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Visteon Corporation (VC): Free Stock Analysis Report

Spartan Motors, Inc. (SPAR): Free Stock Analysis Report

Cooper Tire & Rubber Company (CTB): Free Stock Analysis Report

Cooper-Standard Holdings Inc. (CPS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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