Goodyear Tire Q3 Earnings: Key Insights and What’s Ahead for 2025

Goodyear Tire & Rubber Co (GT) has reported its third-quarter 2024 earnings, revealing both achievements and challenges as it navigates a complex industry environment. The quarter reflected the company’s ongoing implementation of its Goodyear Forward transformation plan, contributing to a fourth consecutive quarter of segment operating income (SOI) margin growth.

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Key Insights from Goodyear Tire & Rubber Co’s Earnings Report:

For Q3 2024, Goodyear posted a net loss of $34 million, or $0.12 per share, in contrast to an adjusted net income of $105 million, or $0.37 per share. This shift highlights both operational improvements and persistent market challenges. Key figures include:

• Segment operating income of $347 million, reflecting a margin expansion of 7.2%, driven by the Goodyear Forward plan and other favorable adjustments.
• Revenue of $4.8 billion with tire unit volumes totaling 42.5 million units, a decline from the previous year largely due to lower replacement tire volumes in key markets.
• Improved year-over-year results in the Asia Pacific segment, achieving an operating income of $72 million and an 11.7% SOI margin, showcasing Goodyear’s targeted growth strategies in emerging sectors like electric vehicles (EVs).

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The Goodyear Forward plan, aimed at driving efficiency and profitability, contributed $123 million in benefits to Q3 results. The company also recorded an increase in its SOI margin, driven by targeted cost reductions and strategic adjustments in its portfolio.

Management Discussion and Analysis:

CEO Mark Stewart attributed the positive SOI growth to the ongoing success of the Goodyear Forward transformation plan, noting that “consistent execution” has fortified Goodyear’s operational foundation. Stewart further commented on Goodyear’s intent to increase its 2024 Goodyear Forward gross benefits target to $450 million and remains optimistic about achieving a 10% SOI margin by the end of 2025. CFO Christina Zamarro emphasized Goodyear’s focus on optimizing portfolio assets and increasing profitability despite volume declines.

The Americas segment, which saw an 8.4% decrease in net sales to $2.9 billion, was impacted by a drop-in replacement tire volume. Nonetheless, SOI margin for the region rose to 8.8%, reflecting gains from Goodyear Forward and insurance recoveries related to past storm damages.

Stock Target Advisor’s Analysis on Goodyear Tire & Rubber Co:

Stock Target Advisor rates Goodyear Tire & Rubber Co. as “Slightly Bearish,” with a target price of $12.67. This rating is influenced by a mix of positive and negative factors:

• Positives include Goodyear’s high market capitalization, superior risk-adjusted returns compared to peers, and strong cash flow generation.
• Negatives involve high volatility, below-median earnings growth, and significant leverage. Over the past year, Goodyear’s stock has faced a 35.04% decline, mirroring challenges in revenue and earnings growth rates compared to the sector.

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Conclusion:

Goodyear Tire & Rubber Co. continues to navigate a challenging market with strategic initiatives under the Goodyear Forward plan. Investors may want to remain cautious, balancing Goodyear’s achievements with its ongoing challenges.