When the world's largest tire company reported last week that its third-quarter earnings marked its best showing in seven years, it seemed to be the exception that proved the rule. Warren Buffett doesn't invest in turnaround situations because he considers them rarely successful; Peter Lynch, on the other hand, sees viable opportunities in turnarounds. The difference between the two approaches can be summed up like this: Turnarounds rarely turn around, but sometimes they do.

Goodyear's (NYSE:GT) results fall into the latter camp. The tire maker notched $5 billion in sales in the third quarter -- its second consecutive quarter with sales at or above that number -- while net income jumped 274% to $142 million, or $0.70 per share. The success underscored Goodyear's restructuring gamble of forgoing low-cost volume in favor of higher-margin products. That strategy also allowed it to minimize the impact of higher raw material costs, which increased $148 million in the quarter.

Goodyear has also been jettisoning operations that fall outside its core strengths. As it attempts to save $1 billion by 2008, it has reduced capacity by as much as 12% through plant closings, and it's contemplating the sale of its engineered products division. Though that segment continued to produce record sales for the quarter, growing 7% to $407 million, it was one of the few divisions not reporting higher profit margins; they fell by 26% because of higher costs.

The company was likely proudest of its North American division, which composed the largest segment with more than $2.3 billion in sales -- up 5% year over year. Its margins doubled to 2.4% even as tire units remained constant, reflecting the higher-priced products it was able to push. Hurricanes Katrina and Rita caused temporary production cuts and a disruption in the division's supply of raw materials; while its tire-making plants are back to normal production levels, the hurricanes swiped about $0.05 a share from the results.

Goodyear's good fortune seems to come at the expense of competitors such as Cooper Tire & Rubber (NYSE:CTB), which recently withdrew the third-quarter guidance it had confidently announced last August, and Bridgestone, which just paid Ford (NYSE:F) $240 million to settle a long-running dispute related to Firestone tire recalls in 2000. Michelin also cut its full-year profit forecast, causing a 6% drop in its shares, while Continental fell 1.5% on predictions of lower demand.

Though its fourth-quarter results aren't expected to be so dramatic, Goodyear remains on a roll for a record year.

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Fool contributor Rich Duprey owns shares in both Goodyear and Ford but does not own any of the other stocks mentioned in this article. The Motley Fool has a disclosure policy.