Goodyear Reports Mixed Q4 Results, Shares Volatile
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy GT?
Source: seekingalpha
- Earnings Miss: Goodyear (GT) reported an adjusted profit of $0.39 per share for Q4, which, while up a penny year-over-year, fell short of expectations by 10 cents, leading to an 8% drop in after-hours trading at one point.
- Revenue Beat: Total sales decreased less than 1% to $4.9 billion but exceeded expectations by $50 million, primarily driven by a 4.9% increase in EMEA sales, which partially offset declines in North America and Asia Pacific.
- Operating Income Growth: The company's segment operating income rose 9% to $416 million, reflecting $192 million in benefits from the Goodyear Forward initiative, indicating effective cost control measures amid inflation and other costs.
- Challenging Market Conditions: Despite facing tough industry conditions, CEO Mark Stewart emphasized a greater focus and discipline on controllable elements, with Q4 results marking the highest operating income and margin in over seven years, showcasing the company's resilience in adversity.
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Analyst Views on GT
Wall Street analysts forecast GT stock price to rise
5 Analyst Rating
3 Buy
1 Hold
1 Sell
Moderate Buy
Current: 9.340
Low
7.30
Averages
9.86
High
13.00
Current: 9.340
Low
7.30
Averages
9.86
High
13.00
About GT
The Goodyear Tire & Rubber Company is a tire company. It develops, manufactures, distributes and sells tires for most applications. It also operates commercial truck service and tire retreading centers. The Company operates approximately 800 retail outlets where it offers its products for sale to consumer and commercial customers and provides repair and other services. It manufactures its products in 51 manufacturing facilities in 19 countries. Its segments represent its regional tire businesses: the Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific. It manufactures and sells numerous lines of rubber tires for automobiles, trucks, buses, aircraft, motorcycles, earthmoving and mining equipment, farm implements, industrial equipment, and various other applications. Its brands include Goodyear, Cooper, Kelly Tires, Mastercraft Tires, Mickey Thompson, Roadmaster, Debica, Sava, Fulda, Avon Tyres, and Sava, among others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Employment Cost Index Decline: The US Q4 employment cost index rose by +0.7% quarter-over-quarter, below the expected +0.8%, marking the smallest increase in 4.5 years, suggesting easing labor cost pressures that may influence the Fed's monetary policy decisions.
- Mixed Market Performance: The Dow Jones Industrial Average reached a new all-time high, closing up +0.10%, while the S&P 500 and Nasdaq 100 indices fell by -0.33% and -0.56%, respectively, reflecting divergent market sentiment and uncertainty.
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- Employment Cost Index Decline: The Q4 employment cost index rose by 0.7% quarter-over-quarter, below the expected 0.8%, marking the smallest increase in 4.5 years, suggesting easing labor cost pressures that may influence Federal Reserve monetary policy decisions.
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- Disappointing Earnings: The adjusted earnings per share of $0.39 fell short of the expected $0.49, resulting in a 15% drop in stock price post-report, reflecting investor concerns over profitability.
- Significant Annual Loss: For the full year 2025, Goodyear's sales declined by 2% to $10.8 billion, with operating profit margins dropping 170 basis points to 6.8%, leading to a substantial loss of $5.99 per share, highlighting severe financial challenges.
- High Debt Risk: With net debt at $6.5 billion, exceeding its $3 billion market capitalization, and an enterprise value-to-free cash flow ratio of 55x, Goodyear's stock appears overvalued, prompting caution among investors.
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- Strong Cash Flow Performance: The company generated over $1.3 billion in free cash flow, with net debt declining by $1.6 billion year-on-year, showcasing robust financial health that supports future investments and shareholder returns.
- Effective Strategic Transformation: Under the Goodyear Forward program, the company achieved $1.5 billion in run rate benefits and aims for 10% organic growth in 2026, demonstrating its ongoing focus on high-value market segments and product innovation.
- Cautious Market Outlook: Despite management's optimism for the future, a projected 10% decline in first quarter volume and a $60 million headwind from unabsorbed overhead may impact short-term performance.
See More
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- Earnings Miss: The adjusted earnings per share were $0.39, falling short of analysts' expectations of $0.49, although GAAP earnings of $0.36 represented a 44% year-over-year increase, reflecting the company's profitability under specific conditions.
- Annual Decline: For the full year 2025, Goodyear's sales declined by 2% to $10.8 billion, with operating profit margins dropping by 170 basis points to 6.8%, highlighting a significant deterioration in overall profitability.
- Debt Pressure: Goodyear's net debt stands at $6.5 billion, exceeding its $3 billion market capitalization, resulting in an enterprise value-to-free cash flow ratio of 55x, suggesting that the current stock price may be overvalued and increasing investment risks.
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