Shares fell after an earnings disappointment, making this turnaround company even more undervalued. The shares have a current dividend yield of 4.85%, paid quarterly.
The Goodyear Tire & Rubber Company (GT)
From The Prudent Speculator
The Goodyear Tire & Rubber Company (GT) is a leading supplier of light vehicle tires, selling in two distinct markets: replacement and vehicle manufacturers. GT shares ended
2019 down more than 20%, despite a 40% pop off the September lows. Concerns about tariffs impacting global auto sales, not to mention higher raw material costs and unfavorable currency translation, have continued to weigh.
We like management’s ongoing efforts to restructure factories in Europe, modernize infrastructure, reduce headcount and adjust production volume to higher-margin tires.
Over the long run, GT should gain from structurally higher demand for tires in emerging markets, given the rise in new vehicle sales as more people reach the middle class. GT trades for just 7 times NTM estimated earnings, while top- and bottom-line growth should resume in 2020.
John Buckingham, The Prudent Speculator, www.theprudentspeculator.com, 877-817-4394, January 2020