Goodyear Tire stock gains after profit and sales beat expectations, while margin contracts

goodyear-tire-stock-gains-after-profit-and-sales-beat-expectations,-while-margin-contracts

Shares of Goodyear Tire & Rubber Co. GT, -9.49% rose 0.7% in premarket trading Friday, even after the tire marker reported first-quarter profit and sales that beat expectations, while gross margin contracted as cost of sales growth outpaced sales growth. Net income rose to $96 million, or 33 cents a share, from $12 million, or 5 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share fell to 37 cents from 43 cents, given increased taxes and interest expense, but beat the FactSet consensus of 23 cents. Sales grew 39.8% to $4.91 billion, boosted by the Cooper Tire merger, improvements in price/mix and higher volume, and above the FactSet consensus of $4.73 billion. Tire unit volumes rose 29% to 45.0 million, as replacement unit volume increased 35% and original equipment unit volume grew 9%. Cost of goods sold jumped 44.7% to $3.97 billion, with gross margin contracting to 19.2% from 21.6%. After Goodyear’s fourth-quarter report, the stock initially rallied in the premarket, but then closed the session with the biggest one-day selloff since October 1987, after the company provided a disappointing full-year free cash flow outlook on the post-earnings conference call. The stock has plunged 36.2% year to date through Thursday, while the S&P 500 SPX, -0.57% has lost 13.0%.

Source: Marketwatch

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