Check out the latest Goodyear Tire & Rubber earnings call transcript.

What happened

Shares of Goodyear Tire & Rubber (NASDAQ:GT) fell 13% on Jan. 15, following a filing with the Securities and Exchange Commission that disclosed preliminary expectations for the company's full-year 2018 results. In short, the filing said the company's preliminary results for 2018 included a 3% decline in tire unit volumes, and that the company's operating income would fall short of its previous guidance for $1.3 billion.

So what

The release pointed to a number of factors that affected the company's results. This included seasonal impacts to its tire business in Europe in the fourth quarter, as well as supply constraints in the U.S. But it also highlighted ongoing challenges with the economic environments in China and India.

A flat tire on a car

Image source: Getty Images.

Besides the unexpected seasonal issues late in the fourth quarter, there was little the company announced in the release -- which, frankly, was relatively light on specifics -- that should have caught investors unawares. The company has struggled with demand shifts in Asia for some time, particularly in China, since that country's economic growth is slowing.

Furthermore, the company continues to be impacted by commodity prices; even with oil prices having fallen sharply since October, it takes time for those benefits to work through Goodyear's supply chain and help improve the bottom line.

Now what

On one hand, investors should continue to be wary about Goodyear's near-term prospects. Between China's slowing growth, the negative impact of tariffs which have raised material costs for the company, and some signs of weak global economic growth in store for 2019, there's no promise that the company's results will start improving immediately.

But the bar is very, very low. With Goodyear's shares trading for less than 6 times estimates for 2019 earnings and the recent drop in its stock price pushing the dividend yield well above 3%, it looks like the market is already pricing a lot of the downside into Goodyear's stock.

The tire business is competitive, subject to the whims of the economy, and heavily affected by raw material prices. But Goodyear's scale, massive distribution, and brand power do give it a leg up over many of its competitors. If you're searching for a solid value play with a reliable dividend, Goodyear doesn't look too bad.

I don't know that it has a very high ceiling for big returns, but the floor seems to be quite low based on how the market is pricing it today -- so long as you're willing to ride out any short-term economic headwinds that could crop up in the coming quarters.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.