Goodyear Tire & Rubber's (GT, Financial) Assurance All-Season tire introduced in 2014 is estimated to reach sales of 1 million units earlier than any preceding new product. Similarly, its commercial truck business registered a solid year with fleets continually leveraging its exceptional products and strategic key business solutions.
Goodyear’s product lead in the area was established by standard wins and platform conclusions in the significant magazine tests along with making a solid hold in tire labeling in Europe.
Improving traction
The significant customer traction for Goodyear’s new tire introductions for the commercial trucks business along with a major market capture in Europe is believed to significantly expand the company’s top line and bottom line, going forward.
Latin America performed a continued release of innovative superior value-added Goodyear products that gained significant customer traction. In Mexico and Brazil, Goodyear expanded its share by offering an impressive growth in consumer replacement volume and by completely revamping its portfolio to benefit from the major trend shift to HVA products.
In the Asia-Pacific region, Goodyear’s volume growth in India and China added to solid earnings for the fourth quarter. Its products achieved many awards and Goodyear is growing its delivery to hugely benefit from the expanding market opportunities.
The major customer traction for Goodyear’s key products in the growing markets of Asia-Pacific such as China and India, Brazil, Mexico and Latin America is forecast to enable Goodyear in leading the competition very soon by capturing a significant market share.
Further, Goodyear delivered $1 billion of operating free cash flows consecutively for the second year in a row and in line with its key strategy to generate sustainable returns for its shareholders, associates and customers.
During the quarter, several of Goodyear’s customers and truck tire dealers registered extremely robust results and highlighted the popularity of Goodyear brand in the marketplace.
The significant returns to the shareholders and customers are estimated to expand the brand visibility, making Goodyear more popular among the key customers and stakeholders.
Product development will drive growth
For this year, Goodyear launched an entirely unique line of tires for the Kelly brand to match its current offerings of Goodyear light truck and passenger vehicle tires. The innovative Kelly tires were developed by Goodyear in response to its customers' rising need for the branded products superior to private label or Asian imported tires.
Goodyear has also declared its plan to initiate the selling of its consumer replacement tires online at Goodyear.com in North America. This new platform is believed to accelerate the sales of the company tires in North America.
The Kelly brand of Goodyear tires and the new online platform for selling the tires is forecast to enhance the tire sales of the company, going forward.
Conclusion
Overall, the investors are advised to invest in the Goodyear Tire & Rubber Company looking at the impressive valuation levels with the trailing P/E and forward P/E ratios of 13.70 and 8.10 respectively, indicating that the company is reasonably valued. The PEG ratio of 0.83 suggests impressive company growth.
The profit margin of 3.00% is satisfactory for the investors. Diluted EPS of 1.99 looks good as well. Moving ahead, Goodyear only needs to optimize its balance sheet with huge total debt of $6.86 billion against total cash of just $1.74 billion in order to plan for other prospective key investments.
