Goodyear Tire and Rubber Company
GT
$6.40
+6.84%
The Goodyear Tire & Rubber Company is a leading global manufacturer and seller of rubber tires for a diverse range of vehicles and equipment, including automobiles, trucks, aircraft, and industrial machinery. It operates as a well-established brand with a significant market presence across three geographic segments, with the Americas being its largest revenue contributor. The current investor narrative is heavily focused on the company's operational challenges and its sensitivity to macroeconomic factors, with recent news highlighting how volatile input costs, such as oil prices, can cause sharp swings in the stock as they directly impact production expenses and consumer demand for replacement tires.…
GT
Goodyear Tire and Rubber Company
$6.40
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Investment Opinion: Should I buy GT Today?
Hold. The core thesis is that GT presents a high-risk, high-potential-reward turnaround bet, but the severe fundamental risks and lack of a clear catalyst warrant a neutral stance until evidence of operational improvement emerges.
Supporting evidence includes the stock's extremely low valuation (PS of 0.14x, Forward P/E of 8.35x), which prices in significant distress. Analyst expectations for a return to profitability (estimated EPS of $2.00) provide a tangible goalpost. However, this is counterbalanced by deep unprofitability (trailing EPS of -$0.68), high leverage (Debt/Equity of 2.24), and catastrophic capital returns (ROE of -53.23%). The stock's technical position, trading near 52-week lows after a -42.86% annual decline, reflects these fundamental woes.
The two biggest risks are 1) a failure to return to profitability, invalidating the forward P/E valuation, and 2) a liquidity crunch exacerbated by high debt. This Hold rating would upgrade to a Buy if the company demonstrates consecutive quarters of positive net income and stabilizes its balance sheet. It would downgrade to a Sell if the stock breaks below the $5.43 support on worsening fundamentals. Relative to its own distressed state, the stock appears fairly valued—it is cheap for a reason, not undervalued.
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GT 12-Month Price Forecast
The outlook for GT is bifurcated between a cyclical recovery story and a value trap. The base case of volatile, range-bound trading is most likely, given the powerful opposing forces of deep-value valuation and severe fundamental weakness. The stance is neutral because the path to a sustainable bull case requires multiple sequential improvements (margin recovery, debt management, demand stability), each carrying significant execution risk. We would upgrade to bullish on confirmation of margin expansion and debt reduction, or downgrade to bearish on a breakdown below $5.43 with no profit recovery in sight.
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 $8.32 and implied upside of +30.0% versus the current price.
Average Target
$8.32
2 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
2
covering this stock
Price Range
$5 - $8
Analyst target range
Analyst coverage for Goodyear is extremely limited, with only 2 analysts providing estimates, which typically indicates it is a less-followed name and can lead to higher volatility and less efficient price discovery. The available data provides consensus estimates for EPS and revenue but does not include a consensus price target, Buy/Hold/Sell distribution, or a target price range, making it impossible to calculate implied upside/downside or gauge sentiment strength; the estimated EPS range for the forward period is $1.86 to $2.06, suggesting some variability in profit expectations. The implications of minimal coverage are significant, as the absence of a published target range means there is no clear analyst-derived signal on the stock's fair value, leaving investors to rely more heavily on fundamental and technical analysis amid high uncertainty.
Bulls vs Bears: GT Investment Factors
The bear case currently holds stronger evidence, anchored by the company's severe profitability crisis, high leverage, and persistent stock price decline. The bull case rests primarily on extreme valuation and the potential for a cyclical recovery in input costs. The single most important tension in the investment debate is whether Goodyear's operational challenges are terminal or cyclical. If the company's negative margins and high debt lead to a liquidity crisis, the stock could fall further. Conversely, if lower input costs and management execution lead to a return to profitability as analysts forecast, the current valuation offers substantial upside.
Bullish
- Extreme Low Valuation: The stock trades at a Price-to-Sales ratio of just 0.14x, which is an exceptionally low multiple suggesting the market has priced in severe distress. This valuation provides a significant margin of safety if the company can stabilize its operations.
- Analyst Expects Profitability Return: Analysts forecast a forward EPS of $2.00, implying a forward P/E of 8.35x, which signals an expected return to profitability. The estimated EPS range of $1.86 to $2.06 provides a concrete target for earnings recovery.
- Positive Short-Term Momentum: The stock has gained 10.15% over the past month and shows a relative strength of +10.23% against the SPY, indicating a potential oversold bounce. This technical relief rally could signal a near-term bottom after a 42.86% annual decline.
- Sensitivity to Input Cost Relief: Recent news highlighted that lower oil prices directly reduce Goodyear's major production costs and can stimulate consumer demand. This creates a clear, cyclical catalyst for margin improvement and stock price appreciation.
Bearish
- Severe Profitability Crisis: The company reports a trailing EPS of -$0.68 and a net margin of -9.41%, indicating it is deeply unprofitable. A negative ROE of -53.23% shows catastrophic destruction of shareholder equity.
- High Financial Leverage Risk: A debt-to-equity ratio of 2.24 signals dangerously high leverage, which is particularly risky for an unprofitable company. The current ratio of 1.06 points to potential liquidity constraints in meeting short-term obligations.
- Persistent Long-Term Downtrend: The stock is down 42.86% over the past year and 27.27% over six months, trading just 9% above its 52-week low of $5.43. This reflects sustained negative momentum and a severe lack of investor confidence.
- Minimal Analyst Coverage: Only 2 analysts provide estimates, and there is no consensus price target available. This lack of coverage suggests limited institutional interest and can lead to higher volatility and inefficient price discovery.
GT Technical Analysis
The stock is entrenched in a pronounced long-term downtrend, evidenced by a 1-year price decline of -42.86% and a 6-month decline of -27.27%. As of the latest close of $6.40, the price is trading near the bottom of its 52-week range, at approximately 9% above the 52-week low of $5.43, which suggests the stock is in deep value territory but also reflects severe negative momentum and significant fundamental concerns. Recent momentum shows a stark divergence, with a 1-month gain of 10.15% contrasting sharply with the 3-month loss of -5.60%, indicating a potential short-term relief rally or oversold bounce within the context of a persistent bear market; this is further supported by the stock's strong relative strength of +10.23% against the SPY over the past month. Key technical levels are clearly defined, with immediate resistance at the 52-week high of $11.79 and critical support at the $5.43 low; a sustained breakdown below $5.43 would signal a continuation of the downtrend, while a move above $11.79 would require a major catalyst. The stock's beta of 1.137 indicates it is approximately 14% more volatile than the broader market, which is relevant for risk assessment given its substantial 1-year max drawdown of -53.27%.
Beta
1.14
1.14x market volatility
Max Drawdown
-53.3%
Largest decline past year
52-Week Range
$5-$12
Price range past year
Annual Return
-42.9%
Cumulative gain past year
| Period | GT Return | S&P 500 |
|---|---|---|
| 1m | +10.2% | +0.3% |
| 3m | -5.6% | +10.9% |
| 6m | -27.3% | +9.3% |
| 1y | -42.9% | +24.3% |
| ytd | -28.3% | +8.8% |
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GT Fundamental Analysis
Revenue trajectory analysis is constrained as specific quarterly revenue and growth rate figures are not available in the provided data; however, analyst estimates suggest a forward revenue expectation of approximately $18.03 billion, though the trend from prior quarters cannot be assessed. Profitability is a critical weakness, with the company reporting negative trailing earnings per share of -$0.68 and a net margin of -9.41%, indicating it is currently unprofitable; the gross margin of 18.44% and operating margin of 3.57% provide some context for underlying operational efficiency, but the negative net income and ROE of -53.23% highlight significant challenges in translating sales to bottom-line results. The balance sheet shows elevated financial risk, with a debt-to-equity ratio of 2.24 signaling high leverage, and a current ratio of 1.06 points to potential liquidity constraints; the negative ROE of -53.23% and a marginally positive ROA of 0.94% further illustrate poor returns on capital employed, suggesting the company is not generating sufficient returns to cover its cost of capital.
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
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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 approximately 0.14x, which is an extremely low multiple, and a forward PE of 8.35x is cited based on positive estimated EPS, highlighting the market's expectation for a return to profitability. Peer comparison data for the Auto - Parts industry is not provided, so a sector premium/discount assessment cannot be quantified; the low absolute PS ratio of 0.14x typically suggests the market is pricing in significant distress or low growth expectations relative to sales. Historical context for the stock's own valuation multiples is unavailable, preventing analysis of whether the current PS ratio is near historical highs or lows; this lack of data limits the ability to determine if the current level represents a cyclical low or a new normal based on deteriorated fundamentals.
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 severe. The company's negative net margin of -9.41% and negative ROE of -53.23% indicate a fundamental inability to generate profits from its operations. High leverage, with a debt-to-equity ratio of 2.24, compounds this risk, making the company vulnerable to rising interest rates and potentially limiting its ability to invest. The current ratio of 1.06 suggests limited liquidity headroom, which could become critical if operating cash flow remains weak.
Market & Competitive Risks are elevated. The stock's beta of 1.137 indicates it is 14% more volatile than the market, which is typical for a distressed cyclical name. The primary risk is valuation compression; while the PS ratio of 0.14x is low, it could persist or worsen if profitability does not materialize. The company is highly sensitive to macroeconomic factors, as evidenced by recent news linking stock moves directly to oil price volatility, which affects both input costs and consumer demand for replacement tires.
Worst-Case Scenario involves a continuation of operational losses leading to a liquidity crisis, forcing asset sales or dilution at distressed prices. A severe economic downturn could further suppress tire demand while keeping input costs elevated, squeezing margins further. In this scenario, the stock could realistically retest and break below its 52-week low of $5.43, implying a downside of approximately -15% from the current price of $6.40. Given the stock's historical max drawdown of -53.27%, a drop of 30-40% is conceivable in a prolonged bear case.
FAQ
The key risks are, in order of severity: 1) Financial Risk: High leverage (Debt/Equity 2.24) and negative profitability create a potential liquidity crisis. 2) Operational Risk: The company is currently unprofitable with a trailing EPS of -$0.68 and needs to execute a complex turnaround. 3) Macroeconomic Risk: The stock is highly sensitive to oil price volatility, which impacts both costs and demand, as highlighted in recent news. 4) Market Risk: With a beta of 1.137, the stock is more volatile than the market, and minimal analyst coverage can lead to sharp, sentiment-driven price swings.
The 12-month forecast presents three scenarios with assigned probabilities. The Base Case (50% probability) sees the stock trading between $6.50 and $8.00 as it shows gradual improvement but struggles with debt and margins. The Bull Case (25% probability) targets $9.00 to $11.79 on a successful margin recovery and return to profitability. The Bear Case (25% probability) warns of a drop to $4.50-$5.43 if operational losses persist and liquidity concerns mount. The Base Case is most likely, hinging on the company achieving its analyst-estimated EPS of ~$2.00.
GT appears statistically cheap but is likely fairly valued given its fundamental risks. The trailing PS ratio of 0.14x is extremely low, and the forward P/E of 8.35x is below market averages, suggesting undervaluation. However, these multiples are justified by the company's negative profitability (-9.41% net margin) and high financial leverage. The valuation implies the market expects either a successful turnaround or continued distress, with no premium assigned for growth. It is cheap for a reason, not necessarily undervalued.
GT is a speculative buy only for investors with a high risk tolerance and a long time horizon. The stock trades at an extremely low Price-to-Sales ratio of 0.14x and analysts forecast a return to profitability (Forward P/E 8.35x), offering significant upside if the turnaround succeeds. However, it carries severe risks, including negative earnings, high debt (Debt/Equity 2.24), and a stock price down 42.86% over the past year. It is not a good buy for conservative investors or those seeking stable returns.
GT is unsuitable for short-term trading due to its high volatility (beta 1.137) and sensitivity to unpredictable factors like quarterly earnings and oil prices. It pays no dividend, eliminating an income component. Given its deep-value, turnaround nature, it is theoretically a long-term investment, but only for investors willing to hold for 3-5 years to see if the operational recovery materializes. The severe fundamental risks mean any investment should be considered speculative and sized appropriately within a portfolio.