Goodyear Tire and Rubber Company
GT
$5.89
+0.34%
Goodyear Tire & Rubber Company is a global manufacturer and seller of rubber tires for a wide range of vehicles and equipment, including automobiles, trucks, aircraft, and industrial machinery, operating within the Auto - Parts industry. The company is a long-established brand leader in the global tire market, distinct for its extensive product portfolio and regional business segments across the Americas, EMEA, and Asia Pacific. The current investor narrative is heavily focused on the company's operational sensitivity to input costs, as evidenced by a recent stock surge linked to lower oil prices reducing production expenses, while broader debates likely center on its ability to navigate cyclical demand pressures, achieve profitability, and manage a highly leveraged balance sheet in a challenging macroeconomic environment.…
GT
Goodyear Tire and Rubber Company
$5.89
Related headlines
Investment Opinion: Should I buy GT Today?
Rating: Hold. The core thesis is that while GT is priced for distress with a PS ratio of 0.14, offering a speculative deep-value opportunity, the severe fundamental risks of capital destruction, high leverage, and poor momentum warrant extreme caution, making it unsuitable for most investors outside of a high-risk, speculative portfolio sleeve.
The Hold rating is supported by the conflicting signals in the data. The valuation is undeniably cheap on a sales (PS 0.14) and cash flow (PCF 3.17) basis, and the forward P/E of 6.87 projects a major earnings recovery. However, this is counterbalanced by the -53.23% ROE, the D/E of 2.24, the -27.59% 1-year return, and the stock's position near 52-week lows. The single analyst's forward EPS estimate of $2.01 is the linchpin for any bullish case, but it stands alone against a backdrop of negative trailing performance.
The two biggest risks are the failure to achieve projected profitability, invalidating the forward P/E thesis, and a deterioration in the balance sheet leading to a liquidity event. This Hold would upgrade to a speculative Buy only if the company demonstrates consecutive quarters of positive net income and stabilizing debt levels, confirming the turnaround. It would downgrade to a Sell on a break below the $6.14 support level or a material worsening of liquidity. Relative to its own distressed fundamentals, the stock appears fairly valued for the high risk it presents; it is not clearly undervalued enough to offset the profound operational challenges.
Sign up to view all
GT 12-Month Price Forecast
The outlook for GT is a binary bet on a successful operational turnaround against a backdrop of severe fundamental weakness. The neutral stance reflects the high probability (50%) of a muddled base case where the stock remains a volatile, troubled company. The bull case, while offering substantial upside to the $12 area, is contingent on flawless execution of a profit recovery that the current -53% ROE makes seem improbable. The bear case risk is material, with a clear path to new lows below $6. The stance would upgrade to bullish on concrete evidence of margin expansion and debt reduction, and downgrade to bearish on a confirmed break of the $6.14 support level.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Goodyear Tire and Rubber Company's 12-month outlook, with a consensus price target around $7.66 and implied upside of +30.1% versus the current price.
Average Target
$7.66
2 analysts
Implied Upside
+30.1%
vs. current price
Analyst Count
2
covering this stock
Price Range
$5 - $8
Analyst target range
Analyst coverage is extremely limited, with only one analyst providing estimates, indicating insufficient coverage for a robust consensus view. This lack of coverage typically characterizes smaller, troubled, or less-followed companies, leading to higher volatility and less efficient price discovery. The single analyst projects forward EPS of $2.01, with a range from $1.84 to $2.11, and forward revenue of approximately $18.0 billion, with a range from $16.9B to $18.7B. The narrow range in EPS estimates suggests some conviction in the near-term profit outlook, but the absence of price targets and a broader analyst pool means there is no clear market-derived upside or downside projection to assess.
Bulls vs Bears: GT Investment Factors
The evidence currently leans bearish, as the fundamental weaknesses of capital destruction, high leverage, and chronic underperformance are severe and persistent. The primary bullish argument rests on a deeply discounted valuation and a projected, but highly uncertain, profit recovery. The single most important tension in the investment debate is whether the company can achieve the analyst-projected EPS of $2.01 to justify its forward P/E of 6.87. If it fails, the stock's valuation based on negative earnings and poor ROE suggests further downside; if it succeeds, the current price represents a significant bargain. The resolution hinges entirely on operational execution and margin improvement in the face of cyclical demand and input cost volatility.
Bullish
- Deeply Discounted Valuation on Sales: The stock trades at a trailing Price-to-Sales (PS) ratio of 0.14 and an EV/Sales of 0.47, indicating the market is valuing the company at a steep discount to its revenue base. This extreme discount could offer a margin of safety if the company demonstrates any operational improvement.
- Forward P/E Suggests Profit Recovery: Despite negative trailing EPS of -$0.68, the forward P/E of 6.87 is based on a single analyst's estimated EPS of $2.01. This implies a significant projected turnaround in profitability, which, if achieved, would represent a major positive re-rating catalyst from the current distressed valuation.
- Positive Sensitivity to Input Cost Relief: Recent news confirms the stock's positive reaction to lower oil prices, a key input cost. The 10.31% 1-month price gain, while volatile, demonstrates operational leverage to improving raw material costs, which can directly boost gross margins from the current level of 18.4%.
- Attractive Price-to-Cash Flow: The Price-to-Cash Flow ratio of 3.17 is relatively low, suggesting the market is not heavily discounting the company's underlying cash generation ability. This provides a valuation anchor distinct from the negative earnings, indicating some financial resilience.
Bearish
- Severe Profitability and Capital Destruction: The company is deeply unprofitable with a trailing net margin of -9.41% and a devastating Return on Equity of -53.23%. This indicates the business is destroying shareholder capital at an alarming rate, which is the core driver of its long-term downtrend and -27.59% 1-year performance.
- Highly Leveraged and Illiquid Balance Sheet: A Debt-to-Equity ratio of 2.24 signals high financial risk, while a Current Ratio of 1.06 offers minimal liquidity headroom. This leveraged position leaves the company vulnerable to interest rate shocks and operational setbacks, limiting its strategic flexibility.
- Chronic Underperformance and Technical Downtrend: The stock is down 27.59% over the past year, significantly underperforming the S&P 500 by over 62 percentage points, and trades near its 52-week low of $6.14. The -48.49% max drawdown and beta of 1.18 confirm it is a high-volatility, high-risk asset in a persistent downtrend.
- Extremely Limited Analyst Coverage: With only one analyst providing estimates, there is a severe lack of consensus and institutional scrutiny. This leads to inefficient price discovery, higher volatility, and increased uncertainty regarding the accuracy of the forward EPS estimate of $2.01.
GT Technical Analysis
The stock is in a pronounced long-term downtrend, with a 1-year price change of -27.59%, significantly underperforming the S&P 500's 34.9% gain over the same period. As of the latest close at $7.06, the price is trading at approximately 12% of its 52-week range ($6.14 to $12.03), positioning it near multi-year lows, which suggests deep value concerns but also high risk of continued fundamental deterioration. Recent short-term momentum shows a sharp divergence, with a 1-month gain of 10.31% contrasting starkly with a 3-month loss of -22.33%, indicating a potential oversold bounce or reaction to specific catalysts like lower input costs, though it remains well below levels from three months ago. Key technical support is clearly defined at the 52-week low of $6.14, while resistance sits at the 52-week high of $12.03; a sustained break below $6.14 would signal a new leg down, whereas reclaiming the $9-$10 area is necessary to suggest a trend reversal. The stock's beta of 1.18 indicates it is about 18% more volatile than the broader market, which, combined with a max drawdown of -48.49%, underscores its high-risk profile for investors.
Beta
1.18
1.18x market volatility
Max Drawdown
-53.3%
Largest decline past year
52-Week Range
$5-$12
Price range past year
Annual Return
-47.1%
Cumulative gain past year
| Period | GT Return | S&P 500 |
|---|---|---|
| 1m | -16.9% | +4.8% |
| 3m | -34.1% | +8.2% |
| 6m | -27.3% | +13.1% |
| 1y | -47.1% | +27.9% |
| ytd | -34.0% | +9.3% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
GT Fundamental Analysis
Revenue trajectory data is not available in the provided dataset, preventing a detailed analysis of top-line growth, deceleration, or segment performance. The company is currently unprofitable, with a trailing twelve-month net margin of -9.41% and negative earnings per share of -$0.68, indicating it is burning through shareholder capital. However, the forward P/E ratio of 6.87 suggests analysts project a return to profitability, with estimated EPS of $2.01, though the wide gap between trailing and forward metrics highlights significant uncertainty in this forecast. The balance sheet shows considerable financial risk, with a debt-to-equity ratio of 2.24, signaling high leverage, and a current ratio of 1.06, indicating limited liquidity headroom. The negative return on equity of -53.23% further confirms poor capital efficiency, while the price-to-cash flow ratio of 3.17 suggests the market is not heavily discounting the company's cash generation ability relative to its market cap.
Quarterly Revenue
N/A
N/A
Revenue YoY Growth
N/A
YoY Comparison
Gross Margin
N/A
Latest Quarter
Free Cash Flow
N/A
Last 12 Months
Open an Account, get $2 TSLA now!
Valuation Analysis: Is GT Overvalued?
Given the negative trailing net income, the primary valuation metric selected is the Price-to-Sales (PS) ratio. The stock trades at a trailing PS ratio of 0.14 and an EV/Sales ratio of 0.47, both indicating a deep discount to its revenue base, which is typical for a company with margin and profitability challenges. Peer comparison data is not available, so a sector-relative assessment of whether this discount is justified cannot be made. Historical valuation context is also unavailable, preventing analysis of whether the current PS ratio is at the high or low end of its own historical range, which would help determine if the stock is priced for permanent impairment or a potential cyclical recovery.
PE
-1.5x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
6.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are paramount. Goodyear is burning capital with a -9.41% net margin and a catastrophic -53.23% ROE. Its high Debt-to-Equity of 2.24 creates significant interest burden risk, while the thin Current Ratio of 1.06 offers little buffer against a downturn. The company's profitability is acutely sensitive to volatile input costs like oil, making earnings highly unpredictable. The wide gap between negative trailing EPS and a positive forward estimate underscores the operational risk in achieving a turnaround.
Market & Competitive Risks are elevated. The stock's beta of 1.18 indicates it is 18% more volatile than the market, amplifying downside during sector-wide selloffs in the cyclical Auto Parts industry. Trading near multi-year lows, the stock faces valuation compression risk if the market perceives its challenges as structural rather than cyclical. The lack of analyst coverage (only one) exacerbates liquidity and price discovery risks, potentially leading to sharper declines on negative news. Competitive pressures and potential market share loss are constant threats in a commoditized industry.
The Worst-Case Scenario involves a recessionary drop in vehicle miles and replacement tire demand, coupled with a spike in oil prices that crushes already weak gross margins. This would lead to larger-than-expected losses, a breach of debt covenants due to the high leverage, and a liquidity crisis. In this scenario, the stock could realistically revisit and break below its 52-week low of $6.14. Given the current price of $7.06, this implies a potential downside of approximately -13%. A more severe bear case, considering the -48.49% max drawdown, could see losses exceeding -30% if fundamental deterioration accelerates.
FAQ
The key risks are, in order of severity: 1) Financial Risk: High leverage (Debt/Equity of 2.24) and poor liquidity (Current Ratio 1.06) risk a covenant breach or liquidity crisis. 2) Profitability Risk: The company is destroying capital (ROE -53.23%) and must achieve a dramatic turnaround to justify its forward P/E. 3) Operational/Cyclical Risk: Earnings are highly sensitive to volatile input costs (oil) and cyclical demand for replacement tires. 4) Market Risk: The stock is in a severe downtrend, underperforming the market by over 62% in the past year, with high volatility (beta 1.18).
The 12-month forecast is highly uncertain due to limited analyst coverage. Our framework outlines three scenarios: A Bull Case (25% probability) sees a successful turnaround driving the stock to $10.50-$12.03. A Base Case (50% probability) envisions muted progress and range-bound trading between $7.50 and $9.00. A Bear Case (25% probability) involves further deterioration, pushing the stock towards $5.50-$6.14, potentially breaking its 52-week low. The Base Case is most likely, assuming the company makes partial progress but continues to struggle with its leveraged balance sheet and margin pressures.
GT appears deeply undervalued on a sales basis, with a Price-to-Sales ratio of 0.14, but this discount is justified by its fundamental problems. The forward P/E of 6.87 suggests the market is pricing in a substantial earnings recovery. Compared to its own history of negative profitability and capital destruction, the stock is fairly valued for the immense risk it carries. The valuation implies the market expects a successful turnaround to avoid further decline; it is not pricing in a high probability of business failure, which is a key risk.
GT is not a good stock to buy for most investors. It is a highly speculative, high-risk turnaround bet suitable only for a small, risk-capital portion of a portfolio. The potential upside is significant if the company hits its projected EPS of $2.01, but the downside is severe, with a -53.23% ROE and high debt (D/E of 2.24) creating a real risk of permanent capital impairment. The lack of analyst coverage adds to the uncertainty. It could be a 'good buy' for a speculative deep-value hunter who has thoroughly analyzed the balance sheet risks and is willing to accept high volatility.
GT is unsuitable for short-term trading for all but the most sophisticated traders due to its high volatility (beta 1.18) and lack of clear catalysts. It is also a poor traditional long-term 'buy and hold' investment given its history of capital destruction. If an investor chooses to speculate on a turnaround, the minimum horizon should be 2-3 years to allow time for the operational plan to unfold. However, this is a speculative position that requires active monitoring of quarterly results and balance sheet health, not a passive long-term hold.