October 26, 2012
What: Shares of tire maker Goodyear Tire & Rubber (NYSE: GT ) fell 10% today, after reporting third quarter earnings.
So what: Revenue fell 13% in the quarter, to $5.3 billion, as volume declined 12%. Net income fell 30%, to $117 million, or $0.41 per share. Adjusted earnings per share were $0.53, which was less than the $0.59 analysts expected.
Now what: Challenges in Europe and an oversupply in inventory were the cause of the weak quarter. Still, the company was able to make a substantial profit in a weak-demand environment, which is a positive long term. Even after the weak quarter ,shares are trading at 7.5 times trailing earnings, which isn't a bad price if conditions in Europe improve. I think there's enough upside and proof that Goodyear can control costs to think the stock has room to move higher.
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