Goodyear Tire & Rubber Earnings Preview

Goodyear Tire & Rubber

is scheduled to report fourth-quarter 2011 results tomorrow, February 14, before the markets open. One of the most famous makers of tires for cars, trucks and aircraft, it was also one of a number of companies with operations disrupted when massive floods hit Thailand. And it has faced concerns about pension expenses, but those concerns have been factored in to 2012 earnings estimates. Analysts are looking for the company to report that its per-share earnings more than doubled from a year ago to $0.20 for the quarter and that revenue totaled $5.9 billion. That would be a year-over-year revenue increase of 16.0%. But note that the EPS estimate has fallen from $0.31 some 60 days ago. However, Goodyear's per-share earnings have topped consensus estimates in the past ten quarters -- by more than 140% in each of the past three quarters. Looking back to the third quarter, Goodyear said it swung from a loss in the year-ago period to a profit of $211 million, or 60 cents a share, topping analyst expectations. Revenue rose 22% year over year to $6.1 billion. The company attributed record quarterly results in part to increased per-tire revenue, a strong consumer response in Europe, and expansion of production in China and Chile. For the full year, the consensus estimate calls for $2.07 per share earnings, an increase of 75.8% from the previous year. But that EPS estimate was $2.18 just 60 days ago. And full-year revenues are expected to have increased 22.1% year over year to $23.0 billion.

This Akron, Ohio-based company engages in the manufacture and sales of tires and related products and services to consumer and commercial customers worldwide. Its brands include Goodyear, Dunlop and Kelly. It also manufactures and markets chemicals and natural rubber products, as well as operating about 1,500 auto service center outlets. The company was founded in 1898 and now is an S&P 500 component with a market cap of $3.4 billion. Competitors include Cooper Tire & Rubber

, Bridgestone and Michelin. Cooper reports on February 27, and analysts expected to see lower fourth-quarter and full-year earnings per share, but revenues up by double digits compared to the previous fourth quarter and full year.

During the three months that ended in December, Goodyear said it expects to resume production at its aviation tire plant in Thailand by May. It also held a topping ceremony for its new corporate headquarters in Akron, sold a former plant in Tennessee and extended its exclusive agreement with Nascar.

Goodyear has a long-term earnings per share growth forecast of 27.3%. Its forward earnings multiple is less than the industry average P/E, but so is its operating margin. The board declared a 5.8% quarterly dividend in December. Short interest is 4.5% of the float. Of 10 analysts surveyed who follow the stock, six rate it a Buy or Strong Buy. Their mean price target on the shares is 27.7% higher than the current share price. Shares have traded mostly between $13 and $15 since late November, with the 200-day moving average providing resistance. The share price is 2.9% lower than a year ago, and down 2.1% year to date. The 52-week range is $8.53 and $18.83. The stock has underperformed Cooper Tire and Monro Muffler Brake

, as well as the broader markets, over the past six months.