Explore Goodyear Tire & Rubber’s Fair Values from the Community and select yours
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Significantly high institutional ownership implies Goodyear Tire & Rubber’s stock price is sensitive to their trading actions
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51% of the business is held by the top 9 shareholders
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Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
To get a sense of who is truly in control of The Goodyear Tire & Rubber Company (NASDAQ:GT), it is important to understand the ownership structure of the business. With 85% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 16% in value last week. However, the 6.9% one-year return to shareholders might have softened the blow. But they would probably be wary of future losses.
In the chart below, we zoom in on the different ownership groups of Goodyear Tire & Rubber.
Check out our latest analysis for Goodyear Tire & Rubber
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Goodyear Tire & Rubber does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Goodyear Tire & Rubber, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don’t have a meaningful investment in Goodyear Tire & Rubber. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 11% of shares outstanding. With 9.9% and 8.6% of the shares outstanding respectively, The Vanguard Group, Inc. and Wellington Management Group LLP are the second and third largest shareholders.
We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can report that insiders do own shares in The Goodyear Tire & Rubber Company. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$104m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
The general public, who are usually individual investors, hold a 10% stake in Goodyear Tire & Rubber. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
It’s always worth thinking about the different groups who own shares in a company. But to understand Goodyear Tire & Rubber better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Goodyear Tire & Rubber (of which 1 shouldn’t be ignored!) you should know about.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.