Goodyear Underwhelms in Q3

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When Goodyear Tire & Rubber Co. (NASDAQ: GT) reported third-quarter financial results early Friday, the company said it had $1.17 in earnings per share (EPS) and $3.85 billion in revenue. The consensus estimates from Thomson Reuters had called for $1.18 in EPS and revenue of $3.97 billion. In the same period of last year, Goodyear posted EPS of $0.99 and $4.18 billion in revenue.

Overall, Tire unit volumes totaled 42 million, which was essentially flat with 2015 after adjusting for the deconsolidation of Venezuela at the end of 2015. Replacement tire shipments were up 1%. Original equipment unit volume was down 6%.

In the Americas’ segment, third-quarter 2016 sales decreased 14% from last year to $2.1 billion. Sales reflect an 8% decrease in tire unit volume. Replacement tire shipments were down 6%. Original equipment unit volume was down 15%.

In terms of guidance for the 2016 full year, the company now expects its total segment operating income to be between $2.000 billion and $2.025 billion. The consensus estimates call for $4.07 in EPS and $15.47 billion in revenue.

The company paid a quarterly dividend of $0.07 per share of common stock on September 1. The board of directors has declared a quarterly dividend of $0.10 cents per share payable December 1, to shareholders of record on November 1. As a part of its previously announced $1.1 billion share repurchase program, the company repurchased 1.7 million shares of its common stock for $50 million during the third quarter.

Richard J. Kramer, chairman, CEO and president of Goodyear, commented:

We delivered solid results in the quarter, with a total segment operating margin of 14.5%, which takes our core segment operating income to record levels on a year-to-date basis.

He added:

Our revised 2016 outlook reflects recent volatility impacting our U.S. commercial truck tire business. This near-term headwind will not have an impact on our value proposition or our ability to execute on our long-term plan.

On the books, Goodyear’s cash and cash equivalents totaled $975 million at the end of the quarter, down from $1.48 billion at the end of 2015.

Shares of Goodyear closed Friday down 9% at $28.29, with a consensus analyst price target of $34.80 and a 52-week trading range of $24.31 to $35.30.