The Goodyear Tire & Rubber Company (NASDAQ:GT) is one of the largest tire companies in the world. The company has a widespread network of 51 manufacturing facilities in 22 different countries. Goodyear's two innovation centers in Akron and Berg are setting technology and performance standards for the company through their futuristic products and services.

Earnings miss, but 2016 targets intact
The Akron, Ohio-based company reported first-quarter 2014 operating EPS of $0.56, missing consensus estimates of $0.60 by 6.70%. This was the company's first negative surprise in the last four quarters. The miss was largely driven by the harsh weather, which adversely affected sales. 

The company's revenue declined year over year by 8.2% to $4.50 billion. Non-tire related businesses, a lower price mix, foreign currency translation losses, and harsh weather all contributed to lower sales.

Despite lower-than-expected results, the company reiterated its segment operating income (SOI) growth target of 10%-15% by 2016. The company is also targeting annual positive free cash flow from operations and adjusted debt-to-EBITDA ratio of 2.5 times by the end of 2016. 

Capital allocation plan
Goodyear, as part of its strategy to increase investor returns and capture high-return growth opportunities in North and Latin American, has also announced an updated (2014-2016) capital allocation plan. 

With its updated capital allocation plan, the company plans to more than double the shareholder return program to $650 million, strengthen the balance sheet, and invest in high-return growth projects by allocating an additional $300 million to growth capex.

Commenting on the updated capital allocation plan CEO Richard J. Kramer said:

This updated capital allocation plan for 2014-2016 reflects Goodyear's commitment to balancing all our priorities-returning cash to shareholders, investing in high-return growth projects and achieving investment grade metrics-to drive long-term shareholder value consistent with our articulated strategy. 

New plant
To serve the North American and Latin American consumer tire markets, the company plans to build a new plant and capitalize on the expected growth in the high-value tire markets in the two regions.

The company will address the growing market demand for high-value-added tires in the Americas by investing approximately $500 million to build a new technologically advanced plant with an initial capacity of around 6 million tires per year. The new plant's capacity can be adjusted with demand and is expected to start production by the first half of 2017 to serve North American and Latin American customers.

Shareholder return and investment-grade rating
Goodyear Tire recently announced it would increase its quarterly dividend by 20% to $0.06 per share. The payout represents an annual rate of $0.22 per share for 2014, and $0.24 per share for 2015.

Goodyear also plans to increase its share buyback program by $350 million to acquire up to $450 million of its stock through 2016. Moreover, based on its performance, the company intends to increase the shareholder return program by $250 million to $900 million.

In its efforts to strengthen its leverage metrics and achieve an investment-grade credit rating, Goodyear also plans to allocate an additional $400 million to the debt reduction program.

Foolish takeaway
As Richard Kramer said, Goodyear is balancing its priorities, strengthening its balance sheet, and redeploying capital to grow its business. While the earnings miss was a disappointment, weather had a role to play in it. I think it has an efficient capital deployment strategy and its efforts to improve margins are yielding results. Goodyear is also launching innovative products and investing in high-return growth projects.