We Think Goodyear Tire & Rubber's (NASDAQ:GT) Healthy Earnings Might Be Conservative

Yahoo

21-02-2025

The Goodyear Tire & Rubber Company (NASDAQ:GT) announced a healthy earnings result recently, and the market rewarded it with a strong uplift in the stock price. According to our analysis of the report, the strong headline profit numbers are supported by strong earnings fundamentals.
Check out our latest analysis for Goodyear Tire & Rubber
For anyone who wants to understand Goodyear Tire & Rubber's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$267m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Goodyear Tire & Rubber to produce a higher profit next year, all else being equal.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
Because unusual items detracted from Goodyear Tire & Rubber's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Goodyear Tire & Rubber's earnings potential is at least as good as it seems, and maybe even better! And one can definitely find a positive in the fact that it made a profit this year, despite losing money last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Goodyear Tire & Rubber, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for Goodyear Tire & Rubber (1 makes us a bit uncomfortable!) that we believe deserve your full attention.
Today we've zoomed in on a single data point to better understand the nature of Goodyear Tire & Rubber's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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