The Goodyear Tire & Rubber Company GT is one of the world's largest tire manufacturing companies, selling under Goodyear, Kelly, Dunlop, Fulda, Debica, Sava and various other brands. The company regularly launches innovative products and services to boost sales. Although Goodyear generates worldwide sales, North America is its leading market. It is also expanding in emerging markets to boost profits. As a result, Goodyear attained record-high segment operating income in 2014 and first-half 2015.
However, Goodyear's revenue has been declining over the years. The company has also been facing challenges in terms of a volatile political and economic environment and high currency fluctuations in Latin America. Pricingp ressure from original equipment manufacturers also negatively impacts the company's profit margins.
Estimate Trend & Surprise History
Investors should note that the third-quarter earnings estimates for Goodyear increased to 98 cents from 95 cents over the last 7 days.
Moreover, the company delivered positive earnings surprises in each of the last four quarter with an average beat of 14.44%. Investors have been eagerly awaiting Goodyear's latest earnings report to see whether it delivers an earnings beat in the third quarter as well.
Goodyear currently has a Zacks Rank #2 (Buy), but that could change following its earnings report which was just released. We have highlighted some of the key stats from the company's earnings announcement below:
Earnings Surpass Estimates, Rise Y/Y
Goodyear reported adjusted earnings of 99 cents per share in the third quarter of 2015, marginally surpassing the Zacks Consensus Estimate of 98 cents. Adjusted earnings were higher than 87 cents generated in the year-ago quarter.
Revenues Miss Estimates, Fall Y/Y
Goodyear logged revenues of $4.18 billion, marginally missing the Zacks Consensus Estimate of $4.20 billion. Moreover, revenues were lower than $4.66 billion posted a year ago, mainly due to unfavorable foreign currency translation.
Key Stats/Developments to Note
Goodyear expects annual segment operating income to increase 10-15% in 2015 and 2016. The company also aims to generate positive free cash flow (excluding pension pre-funding) over this period.
During the reported quarter, Goodyear repurchased 1 million shares of its common stock for $30 million.
Goodyear's share price has fallen 1.56% so far, following the release. Clearly, the initial reaction to the release is negative.
Check back later for our full write up on Goodyear's earnings report!