GT

Goodyear Tire & Rubber Co.

Industrial/Transportation


Presented:10/11/2021
Price:$18.60
Cap:$5.23B
Current Price:$8.28
Cap:$2.36B

Presented

Date10/11/2021
Price$18.60
Market Cap$5.23B
Ent Value$12.35B
P/E Ratio32x
Book Value$14.99
Div Yield0%
Shares O/S280.98M
Ave Daily Vol3,419,438
Short Int3.00%

Current

Price$8.28
Market Cap$2.36B
Goodyear Tire & Rubber Co. engages in the development, manufactures, distribution, and sale of tires. Its products include lines of rubber tires for automobiles, trucks, buses, aircraft, motorcycles, farm implements, earthmoving and mining equipment, industrial equipment and various other applications. The company was founded by Frank A. Seiberling on August 29, 1898 and is headquartered in Akron, OH.

Publicly traded companies mentioned herein: Bridgestone Corp (5108 JP), Cie Generale des Etablissements Michelin SCA (ML FP), Continental AG (CON GR), Goodyear Tire & Rubber Co/The (GT)

Highlights

The presenter is long shares of The Goodyear Tire & Rubber Co (GT), the #3 player in the global tire industry. GT has a $5.2B market cap and just under $7B of net debt. A multi-year down cycle caused GT’s adjusted EPS to fall from $4 in 2016 to $1.08 in 2019. This down cycle was driven by three factors: increased capacity in the US and Europe, rising imports from low cost southeast Asian countries which negatively impacted the industry’s unit economics, and declining SAAR, as lower OEM production freed up incremental tires to be sold into the consumer replacement market, disrupting price. The presenter believes these factors have reversed and that GT will be a massive beneficiary of a significant steepening of the cost curve. He considers this an opportune time to buy the stock, which currently trades at a sub-$20 share price, eyeing upside to $30 – $40 with limited downside.

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Idea Discussion

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