Goodyear Tire & Rubber (GT) delivered better-than-expected Q3 2021 results as the company benefited from positive industry trends in key replacement markets. Revenue and earnings came above consensus estimates at the back of the strongest price/mix in nearly a decade.
Goodyear Tire & Rubber Company designs, manufactures, distributes, and sells tires. Its rubber tires are commonly used for automobiles, trucks, buses, aircraft, motorcycles, among other applications. (See Insiders’ Hot Stocks on TipRanks)
Upbeat Q3 Results
Net sales in the quarter were up 42% to $4.9 billion compared to the same quarter last year, exceeding consensus estimates of $4.75 billion. The Cooper Tire Merger was one of the factors that drove the increase. Additionally, Goodyear Tire & Rubber Company benefited from improvements in price/mix, and an increase in sales from other tire-related businesses, and higher volume.
Adjusted net income increased by nearly tenfold to $206 million compared to $24 million delivered in the same quarter last year. On the other hand, diluted EPS landed at $0.72, exceeding consensus estimates of $0.10.
Tire Unit Robust Demand
Goodyear Tire & Rubber Company saw robust demand from its largest commercial customers during the quarter as the transportation industry moved record freight volume. Consequently, the company delivered another strong quarter of fleet tire volume.
Tire unit volumes landed at 48.2 million, up 32% compared to the same quarter last year, as replacement tire unit volume increased 44% year-over-year. Goodyear Tire & Rubber Company is well-positioned to benefit from increased synergies due to the Cooper Tire combination.
Last month, Deutsche Bank analyst Emmanuel Rosner reiterated a Hold rating on the stock and raised the price target to $29, implying 25.6% upside potential to current levels.
Consensus among analysts is a Hold based on two Holds and one Sell. The average Goodyear Tire & Rubber price target of $20.33 implies 11.9% downside potential to current levels.