On Dec 30, 2014, Zacks Investment Research upgraded The Goodyear Tire & Rubber Company (GT) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Goodyear has been witnessing rising earnings estimates on the back of strong third-quarter results and a positive operating income outlook for 2014. All eight analysts covering the stock raised their earnings per share (EPS) estimates for 2014 and six of them raised the estimates for 2015 in the last 60 days.
Consequently, the Zacks Consensus Estimate for Goodyear’s 2014 EPS increased 5.3% to $2.97 over the last 60 days. This translates into a 13.3% year-over-year improvement.
The Zacks Consensus Estimate for the company’s EPS in 2015 also improved 1.6% to $3.13 over the last 60 days. This implies a 5.4% year-on-year increase.
Moreover, this well-known global tire manufacturer has delivered positive earnings surprises in two of the last four quarters with an average beat of 8.3%. On Oct 29, 2014, Goodyear reported a 27.9% rise in adjusted earnings per share to 87 cents in the third quarter of 2014 from 68 cents a year ago (all excluding special items). Earnings also surpassed the Zacks Consensus Estimate of 71 cents.
Goodyear expects annual segment operating income to increase 10–15% over the 2014–2016 time frame. The company also targets positive free cash flow generation (excluding pension pre-funding) over this period. Moreover, segment operating income growth is expected to be on the higher end of the guidance range of 10–15% in 2014.
Other Stocks to Consider
Investors interested in the auto industry could also consider stocks like Meritor, Inc. (MTOR), Tower International, Inc. (TOWR) and Dana Holding Corp. (DAN), all sporting a Zacks Rank #1.
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