On Nov 13, 2014, we issued an updated research report on Cooper Tire & Rubber Co. (CTB). This Zacks Rank #2 (Buy) stock posted a positive earnings surprise of 6.9% in the last reported quarter.
Cooper Tire’s earnings in the third quarter of 2014 increased to 77 cents from breakeven in the prior-year quarter. Further, the figure surpassed the Zacks Consensus Estimate of 72 cents. Net income amounted to $48 million as against net loss of $0.17 million in the third quarter of 2013.
Revenues of Cooper Tire improved 11% year over year to $920 million in the reported quarter, beating the Zacks Consensus Estimate of $907 million. The improvement came on the back of higher unit volumes, partially offset by unfavorable price and mix.
Cooper Tire plans to launch a record number of tires this year. It also expects the improving product mix to expand profitability.
The company aims to attain operating profit over 10% and net sales of $5–$6 billion per annum in the long term. It plans to reduce its manufacturing costs by 14%, by 2017, through increased automation in production facilities and consolidation of its product portfolio.
Cooper Tire also intends to maintain a sustained annual operating profit of 8–10%. It plans to reduce the number of global product families by 60%, by 2020. This will lead to simplification of the manufacturing process, lower costs, higher sourcing flexibility and faster product development.
In the Americas Segment, Cooper Tire aims to improve margin and mix on the back of sales growth, product launches, capacity conversion to focus on premium products and expansion in markets with relatively lower penetration. In the International Segment, Cooper Tire aims to enhance sales, so that it can generate half of the company’s global revenues.
Key Picks from the Sector
Investors interested in the auto industry could also consider stocks like Gentex Corp. (GNTX), Toyota Motor Corporation (TM) and STRATTEC Security Corporation (STRT), all sporting a Zacks Rank #1 (Strong Buy).
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