Goodyear Tire (GT) Q2 Loss Narrower Than Expected, Sales Top

The Goodyear Tire & Rubber Company GT reported second-quarter 2020 adjusted loss per share of $1.87, narrower than the Zacks Consensus Estimate of a loss of $2.10. Higher-than-expected net sales of tires in America led to lower-than expected loss. Precisely, net sales in America were $1,134 million, surpassing the consensus mark of $798 million.

The bottom line deteriorated from earnings per share of 25 cents recorded in the prior-year quarter due to lower revenues across all segments. Lower industry volume and reduced sales amid the coronavirus pandemic weighed on the firm’s results.

It delivered net revenues of $2,144 million, lower than $3,632 million reported in the year-ago quarter. However, revenues surpassed the Zacks Consensus Estimate of $1,786 million.

For the reported quarter, tire volume was 20.4 million units, down 45% from the year-ago period. Original equipment unit volume decreased 62% due to reduced vehicle production amid factory shutdowns and replacement tire shipments declined 39% from the year-ago quarter owing to lower consumer demand and temporary store closures amid the coronavirus pandemic.

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 price-consensus-eps-surprise-chart | The Goodyear Tire Rubber Company Quote

Key Takeaways

The Americas segment generated revenues of $1,134 million, which compared unfavorably with $1,971 million in the prior-year period. The segment incurred an operating loss of $287 million against income of $134 million in second-quarter 2019. The year-over-year decline was due to reduced volume and weak factory utilization.

Revenues in the Europe, Middle East and Africa segment were $676 million, down from $1,141 million a year ago. The segment’s operating loss was $110 million against operating income of $44 million recorded in the year-ago quarter.

Revenues in the Asia Pacific segment fell 36% year over year to $334 million. The segment incurred operating loss of $34 million for the quarter under review against income of $41 million in the corresponding period of 2019.

Goodyear Tire completed a phased restart of manufacturing facilities in the second quarter. Goodyear had cash and cash equivalents of $1,006 million as of June 2020, up from $908 million as of Dec 31, 2019. As of Mar 31, 2020, long-term debt and finance leases amounted to $5,688 million, up from $4,753 million on Dec 31, 2019.

Zacks Rank & Stocks to Consider

Currently, the company carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space include Garrett Motion Inc GTX, Strattec Security Corporation STRT and Wabash National Corporation WNC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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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.

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