Goodyear (GT) Q2 Earnings & Revenues Miss Estimates, Fall Y/Y

Goodyear Tire GT delivered a second-quarter 2023 adjusted loss per share of 34 cents, wider than the Zacks Consensus Estimate of 15 cents, which decreased from earnings of 46 cents per share reported in the year-ago quarter.

The company generated net revenues of $4,867 million, falling 6.6% on a year-over-year basis and missing the Zacks Consensus Estimate of $5,194 million due to lower volume and the adverse impacts of foreign exchange.

In the reported quarter, tire volume was 40.8 million units, down 10.7% from the year-ago period.

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 $2,939 million, around 6.6% lower than the prior-year period and lagged our estimate of $3,337.3 million due to a 10.9% decline in tire volume. The segment registered an operating income of $103 million, which decreased 64.8% from the year-ago period. The operating margin was hit by lower volumes. The figure missed our expectation of $191 million.

Revenues in the Europe, the Middle East and Africa (EMEA) segment were $1,341 million, down 10.4% from the year-ago period. The figure missed our estimate of $1,385 million due to lower unit volumes. The operating loss for the segment was $19 million in the quarter, declining 136.5%. The figure also missed our estimate of an operating income of $16.9 million.

Revenues in the Asia Pacific segment increased 3.3% year over year to $587 million but lagged our estimate of $589.2 million. The segment’s operating profit was $40 million, up 110.5% from the year-ago figure, owing to the price/mix benefits.

Financial Position

Selling, general & administrative expenses fell to $708 million from $717 million in the year-ago period.

Goodyear had cash and cash equivalents of $1,049 million as of Jun 30, 2023, down from $1,227 million on Dec 31, 2022. Long-term debt and finance leases amounted to $8,027 million, up from $7,267 million on Dec 31, 2022. Capital expenditure in the quarter was $245 million, up from $235 million in the year-ago quarter.

Revised 2023 Outlook

For 2023, the company anticipates raw material costs to rise $25 million, contracting from the prior mentioned $100 million. Capital expenditure are expected to be $1 billion. Interest expenses and depreciation and amortization are expected to be $540 million and $1 billion, up from the prior estimation of $500 million and $950 million, respectively.

Zacks Rank & Stocks to Consider

GT currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked players in the auto space are Oshkosh Corporation OSK, Toyota Motor Corporation TM and PACCAR Inc. PCAR, currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OSK’s 2023 sales and earnings implies year-over-year growth of 17.1% and 110%, respectively. The EPS estimate for 2023 has moved north by $1.28 in the past seven days. The 2024 EPS estimate has moved up by $1.14 in the past seven days.

The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.9% and 61.7%, respectively. The EPS estimate for 2023 has increased by 21 cents in the past seven days. The 2024 EPS estimate has moved up by 20 cents in the past seven days.

The Zacks Consensus Estimate for PCAR’s 2023 sales and earnings implies year-over-year growth of 19.6% and 40.1%, respectively. The EPS estimate for 2023 has moved up by 71 cents in the past 30 days. The 2024 EPS estimate has moved north by 35 cents in the past 30 days.

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