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Goodyear (GT) Q1 Earnings Beat Estimates, Sales Rise Y/Y

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Goodyear Tire GT reported first-quarter 2022 adjusted earnings per share of 37 cents, surpassing the Zacks Consensus Estimate of 18 cents. Higher-than anticipated revenues and operating income across the Europe, Middle East and Africa and the Americas segments, respectively, buoyed the results. The bottom line decreased 14% from the year-ago figure of 43 cents.

The company registered net revenues of $4,908 million, surging 39.8% on a year-over-year basis, led by higher volume, favorable pricing, increased sales from other tire-related businesses and synergies from the Cooper Tire buyout. GT recorded the highest first-quarter revenues in 10 years, riding on robust selling prices. The top line also beat the Zacks Consensus Estimate of $4,893.2 million.

In the reported quarter, tire volume was 45 million units, up 29% from the year-ago period. Replacement tire shipments increased 35%, benefiting from the buyout of Cooper Tire. Original equipment unit volume also increased 9% year over year, reflecting market share gains.

Segmental Performance

In the reported quarter, the Americas segment generated revenues of $2,915 million, 63.1% higher than the prior-year period’s figure but missing the consensus metric of $2,952 million. The segment registered an operating income of $216 million, surging 89.5% and exceeding the consensus mark of $107 million. Improvements in price/mix and the Cooper Tire merger aided the upswing in operating margins.

Revenues in the Europe, Middle East and Africa segment were $1,426 million, rising 16% from the year-ago period. The figure also beat the consensus mark of $1,244 million. The segment’s operating profit came in at $59 million in the quarter, a decline of around 20.3% due to cost inflation of raw materials, wages, benefits, transportation and energy and unfavorable foreign exchange. The figure also lagged the consensus mark of $78 million.

Revenues in the Asia Pacific segment increased 15% year over year to $567 million but missed the consensus mark of $604 million. The segment’s operating profit income was $28 million, down 26.3% from $38 million, owing to high raw material costs.

Financial Position

Goodyear had cash and cash equivalents of $1,053 million as of Mar 31, 2022, down from $1,088 million on Dec 31, 2021. As of the first quarter of 2022, long-term debt and finance leases amounted to $7,450 million, up from $6,648 million on Dec 31, 2021. Capital expenditure in the quarter was $276 million, up from $185 million in the year-ago quarter.

Zacks Rank & Key Picks

GT currently carries a Zacks Rank #4 (Sell).

Better-ranked players in the auto space include BRP Group, Inc. DOOO, sporting a Zacks Rank #1 (Strong Buy) and Dorman Products DORM and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.

BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 13.5% over the past year.

Dorman Products has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been marginally revised 0.7% upwards in the past 60 days.

Dorman Products’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. DORM pulled off a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 7.2% over the past year.

The Zacks Consensus Estimate for Standard Motor’s current-year earnings has been revised around 1.1% upward in the past 60 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 60.5%, on average. The stock has lost 13.9% over the past year.


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