Why Goodyear Tire & Rubber (GT) Stock Is Up Today

NEW YORK (TheStreet) -- Goodyear Tire & Rubber (GT) was gaining 5.3% to $27.62 Monday following a positive feature story from Barron's.

In a feature story Barron's noted that a strong global auto market and improved financials are good signs for Goodyear. The publication also noted that the tire maker has significant investors including Appaloosa Management and Marcato Capital.

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TheStreet Ratings team rates GOODYEAR TIRE & RUBBER CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOODYEAR TIRE & RUBBER CO (GT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, GT's share price has jumped by 72.33%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • GOODYEAR TIRE & RUBBER CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOODYEAR TIRE & RUBBER CO increased its bottom line by earning $2.23 versus $0.69 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.23).
  • GT, with its decline in revenue, underperformed when compared the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Auto Components industry and the overall market, GOODYEAR TIRE & RUBBER CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for GOODYEAR TIRE & RUBBER CO is currently lower than what is desirable, coming in at 26.14%. Regardless of GT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.14% trails the industry average.
  • You can view the full analysis from the report here: GT Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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