Goodyear (GT) Q2 Earnings & Revenues Beat Estimates, Up Y/Y

Goodyear Tire GT reported second-quarter 2022 adjusted earnings per share of 46 cents, surpassing the Zacks Consensus Estimate of 43 cents. Higher-than anticipated revenues in the Americas and Asia Pacific segments and a rise in operating income in the Americas segment buoyed the results. The bottom line increased 43.7% from the year-ago figure of 32 cents.

The company registered net revenues of $5,212 million, surging 31% on a year-over-year basis, which marked the highest second-quarter revenues in a decade, riding on robust selling prices, volume growth and the addition of Cooper Tire. The top line also beat the Zacks Consensus Estimate of $5,070 million.

In the reported quarter, tire volume was 45.6 million units, up 21% from the year-ago period. Replacement tire shipments increased 23%, benefiting from the buyout of Cooper Tire. Original equipment unit volume increased 17% year over year, also benefiting from the buyout of Cooper Tire and business growth.

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise

The Goodyear Tire & Rubber Company Price, Consensus and EPS Surprise

The Goodyear Tire & Rubber Company price-consensus-eps-surprise-chart | The Goodyear Tire & Rubber Company Quote

Segmental Performance

In the reported quarter, the Americas segment generated revenues of $3,147 million, around 40% higher than the prior-year period’s figure and topped the consensus metric of $2,990 million. The segment registered an operating income of $293 million, increasing 25.7% and exceeding the consensus mark of $274 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 $1,497 million, rising 22% from the year-ago period. However, the figure missed the consensus mark of $1,504 million. The segment’s operating profit came in at $52 million in the quarter, an increase of around 21% driven by price mix and higher volumes. Nonetheless, the figure lagged the consensus mark of $62 million.

Revenues in the Asia Pacific segment increased 15% year over year to $568 million and crossed the consensus mark of $566 million. The segment’s operating profit income was $19 million, down 17.4% from the year-ago figure, owing to high raw material costs and inflationary pressure. The figure also lagged the consensus metric of $30.97 million.

Financial Position

Selling, general & administrative expenses flared up to $717 million from $658 million in the year-ago period.

Goodyear had cash and cash equivalents of $1,248 million as of Jun 30, 2022, up from $1,088 million on Dec 31, 2021. As of the second quarter of 2022, long-term debt and finance leases amounted to $7,569 million, up from $6,648 million on Dec 31, 2021. Capital expenditure in the quarter was $235 million, up from $200 million in the year-ago quarter.

Outlook

For the third quarter of 2022, the company anticipates continued volume growth in EMEA and the Asia Pacific segments. Raw material costs are expected to rise nearly $1.0 billion in the second half of 2022 year over year. Inflationary trends are anticipated to persist, especially in transportation, labor and energy costs in the third quarter. Operating results are also likely to be negatively impacted by foreign currency translation by $25 million to $30 million in the third quarter due to the strength of the U.S. dollar at current spot rates.

In 2022, the company expects to reinvest around $300 million in working capital to rebuild inventory levels to meet customer demand and support service levels. Capital expenditure is expected to be in the range of $1.1-$1.2 billion.

Zacks Rank & Key Picks

GT carries a Zacks Rank #3 (Hold), currently.

Better-ranked players in the auto space include Harley-Davidson HOG, Genuine Parts Company GPC and Tesla Inc. TSLA, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Harley-Davidson has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 7% upward in the past 30 days.

Harley-Davidson’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. HOG pulled off a trailing four-quarter earnings surprise of 49.52%, on average. The stock has declined 7.2% in the past year.

Genuine Parts has an expected earnings growth rate of 15% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.3% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 23.3% over the past year.

Tesla has an expected earnings growth rate of 74.6% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 6.7% upward in the past 30 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 32.17%, on average. The stock has risen 24.7% in the past year.

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