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Cooper Tire & Rubber (CTB) Q4 Earnings: Is a Beat in Store?

Zacks Equity Research
Updated

Cooper Tire & Rubber Co. CTB is set to report fourth-quarter 2017 results, before the market opens on Feb 20. Last quarter, the tire manufacturer delivered an earnings beat of 38.8%.

In fact, the company beat estimates thrice and missed once in the trailing four quarters, with an average positive earnings surprise of 17.1%.

Cooper Tire & Rubber’s shares have returned 6.1% in the past six months, outperforming the 1.5% decline of the industry it belongs to.

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

Is A Positive Surprise Likely?

According to our quantitative model, chances of Cooper Tire & Rubber beating the Zacks Consensus Estimate in the fourth quarter are high. This is because, it has the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, which is required to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP for Cooper Tire & Rubber is +7.14%. This is because; the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 66 cents and 62 cents respectively.

Zacks Rank: Cooper Tire & Rubber carries a Zacks Rank #2 (Buy). This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

What’s Driving the Better-Than-Expected Earnings?

For full-year 2017, the company expects operating margin to be at the higher end of the previously announced mid-term target of 8-10%. Further, Cooper Tire expects capital expenditure in the band of $190-$210 million.

The company continues to develop great products with superior design and functionality, which will satisfy market demand in all regions. It plans to lower down its manufacturing costs through increased automation in production facilities and consolidation of the product family. This will result in the simplification of the manufacturing process, lower costs, higher sourcing flexibility and faster product development.

In third-quarter 2017, Americas Tire Operations registered a 7% year-over-year decrease in net sales to $625 million. For the fourth quarter, the Zacks Consensus Estimate for net sales from Americas Tire Operations is $634 million.

In third-quarter 2017, International Tire Operations registered a 44.8% year-over-year rise in revenues to $163 million. For the fourth quarter, the Zacks Consensus Estimate for net sales from International Tire Operations is $156 million.

Other Stocks to Consider

Here are a few other stocks worth considering from the same space with the right combination of elements to outpace earnings estimates this time around.

American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +0.43% and a Zacks Rank #3. Its fourth-quarter 2017 results are expected to be released on Feb 16. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Magna International, Inc. MGA has an Earnings ESP of +1.27% and a Zacks Rank #3. Its fourth-quarter 2017 results are expected to be released on Feb 22.

Sonic Automotive, Inc. SAH has an Earnings ESP of +2.42% and a Zacks Rank #2. Its fourth-quarter 2017 results are expected to be released on Feb 27.

Cooper Tire & Rubber Company Price and EPS Surprise

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

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