The Goodyear Tire & Rubber Company (GT - Analyst Report) celebrated its 117th year in business with record results in 2015. This Zacks Rank #1 (Strong Buy) is expected to grow earnings in the double digits again in 2016.
Goodyear is one of the world's largest tire companies with 49 production facilities in 22 countries around the world.
On Feb 9, Goodyear reported its fourth quarter results and beat the Zacks Consensus by 19 cents. Earnings were $0.93 compared to the consensus of $0.74.Another Beat in Q4
It was the 7th straight beat in a row.
Earnings grew 16% in North America and 20% in Asia Pacific, both of which were records. The Europe, Middle East and Africa appeared to be on its way to recovery.
Sales, however, fell to $4.1 billion from $4.4 billion a year ago. Being a global company, the company saw unfavorable currency translation impacts to the tune of $339 million.
Tire unit volumes rose 7% to 42.1 million partially due to the acquisition of Nippon Goodyear Ltd in Japan. Replacement tire shipments rose 9% and original equipment unit volume jumped 2%.
Estimates Rise for 2016
With the solid earnings report, analysts have been raising estimates.
1 estimate was raised already since the report for 2016, pushing the Zacks Consensus to $3.71 form $3.65. That's earnings growth of 11.7%. Not too shabby in a difficult economic environment for an automotive parts manufacturer that is 117 years old.
Goodyear had a $450 million buyback program in place in the fourth quarter. It purchased 3 million shares for $100 million during that time.Buyback Increased
On Feb 4, it announced it was increasing the buyback by $650 million to a total of $1.1 billion.
Goodyear also continues to pay a dividend which is currently yielding 1%.
Shares Are Dirt Cheap
Goodyear shares have fallen from their recent highs in the 2016 sell off.
That has created a buying opportunity in a company that is still growing earnings.
Goodyear is cheap. It has a forward P/E of just 7.4.
It's price-to-sales ratio is 0.4. A P/S ratio under 1.0 usually indicates value.
Goodyear's price-to-book ratio, another value indicator, is just 1.8. A P/B ratio under 3.0 can mean a company is undervalued.
For investors looking for somewhere to hide in a volatile market, Goodyear is one to keep on the short list.
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