Shares of Cooper Tire & Rubber
How it got here
After a few years of strong recovery, the car industry has sputtered in recent quarters as the economy can't seem to get a firm footing. But, Cooper Tire is firing on all cylinders and is hitting new highs after crushing earnings estimates in the second quarter, continuing its strong operational growth.
Revenue jumped 15% in the second quarter to $1.06 billion and, despite the weak economy, the Americas drove the way by bumping sales up 16%.
What has been most impressive about Cooper Tire's move higher is that competitors and original equipment manufacturers for cars aren't following the same path. Goodyear Tire & Rubber
Below are the metrics that illustrate Cooper Tire's great performance. Only Ford can beat it in profit margin, and Cooper crushes everyone else in growth.
| Price/Book | Quarterly Revenue Growth | Profit Margin | Forward P/E | |
|---|---|---|---|---|
| Cooper Tire | 2.1 | 15.2% | 7.2% | 7.5 |
| Goodyear | 7.2 | (8.4%) | 1.3% | 5.3 |
| Ford | 2.3 | (6.5%) | 13.3% | 6.8 |
| General Motors | 1.2 | (4.5%) | 3.0% | 5.8 |
Source: Yahoo! Finance
Even with all of this the company still trades at a P/E ratio below eight, a good value if growth can continue.
What's next?
Cooper Tire obviously has performed very well over the past year, but to think it can keep outperforming rivals by such a wide margin is asking too much. In the quarterly conference call management was very concerned about the overall economic environment -- that overhang will be a drag on the company going forward. Raw material costs are also having an effect on margins.
I think the stock can continue to outperform the market given the current margin level and growth, but not at the same level it has for the past year. The CAPS community isn't convinced it will outperform at all, giving the stock a three-star rating. Let us know what you think about Cooper Tire in the comments section below.
Interested in reading more about Cooper Tire & Rubber? Click here to add it to My Watchlist for ongoing updates. Likewise, if you're interested in Ford, as a shareholder or potential investor, download our new premium report. One of our top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Simply click here to get instant access to cutting-edge research.
