#4 - Goodyear Tire & Rubber Co (NASDAQ:GT)
Goodyear Tire & Rubber Co (NASDAQ: GT) - In September of 2016, GT’s stock was trading at a P/E ratio of around 24 with a price of over $30. The stock has been cut almost in half in two years, but the P/E ratio has dropped even more, down to just over 6, suggesting that the stock may be oversold. Goodyear has a recent history of delivering consistent profit growth, but that growth has been under pressure from rising commodity prices over the past two years. Between 2016 and 2019, oil prices grew dramatically rising from below $50 a barrel to over $80 a barrel. Since approximately two-thirds of the company’s raw material costs are impacted by the price of oil, the surge in prices derailed the company’s plans for a $1 million growth in segment operating income (SOI) by 2020 that they announced at the end of 2016. Adding to their cost pressures was the fact that oil was not the only commodity to see a significant rise in prices. Steel costs also rose during this period. Fortunately, the company is starting to see relief from these rising prices and, for investors, the other piece of good news is that GT is not just relying on lower material costs to fuel their growth. They instituted a price increase in September 2018 that should improve their profitability even if commodity costs remain flat.
About Goodyear Tire & Rubber
Goodyear Tire & Rubber Co engages in the development, manufacture, distribution, and sale of tires. It operates through the following geographical segments: Americas, Europe, Middle East, and Africa, and Asia Pacific. The Americas segment is involved in the development, manufacture, distribution, and sale of tires and related products and services in North, Central, and South America.
More- Current Price
- $8.63
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $13.30 (54.2% Upside)
