It has been about a month since the last earnings report for Cooper Tire & Rubber Company . Shares have lost about 7.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cooper Tire Q1 Earnings & Revenues Miss Estimates
Cooper Tire recorded earnings of $0.57 per share in the first quarter of 2017, which missed Zacks Consensus Estimate of $0.69. Net income came in at $31 million compared with $59 million in the first quarter of 2016.
Cooper Tire’s revenues decreased 1% to $643 million in this quarter from the year-ago figure of $650 million. The figure also missed Zacks Consensus Estimate of $687.9 million.
Operating profit was $49 million (7.6% of sales) in the first quarter of 2017 compared with $91 million (14% of sales) a year ago. Operating profit was negatively impacted by unit volume decline in North America, as well as volatile raw material costs and product pricing environment. This decrease was partly offset by unit volume increase in the International segment and Latin America.
The company’s shares lost 9.8% to close at $39.15 on Apr 27, reflecting worse-than-expected first-quarter results.
Segment Details
Americas Tire Operations recorded an 8.3% decrease in revenues to $531 million due to lower unit volume, adverse impact of foreign currency translations and unfavorable price and mix. Operating profit in this segment declined 40.4% to $63 million, while operating margin fell from 18.3% to 11.9%. Operating profits declined due to higher raw material costs, manufacturing costs, unfavorable price and mix as well as higher other costs, partially offset by improvement in tariff reversal and lower SG&A costs.
International Tire Operations reported a 37.5% rise in revenues to $142 million, mainly due to higher unit volume as well as favorable price and mix, partially offset by a negative foreign currency impact. Operating profit came in at $2 million against an operating loss of $2 million a year ago. The improvement was backed by higher volumes as well as favorable manufacturing and other costs, which was partly offset by higher SG&A expense and negative foreign currency translation.
Financial Position
Cooper Tire had cash and cash equivalents of $365 million as of Mar 31, 2017, down from $434 million as of Mar 31, 2016. Capital expenditures in the first quarter increased to $45 million in the first quarter of 2017 from $36 million a year-ago quarter.
Share Repurchases
In Feb 2017, Cooper Tire increased the share repurchase program by $300 million and extended it till Dec 2019. During the first quarter of 2017, the company spent $17.8 million on repurchasing 472,967 shares at a price of $37.63 per share. Since Aug 2014, Cooper Tire has bought back a total of 12.7 million shares at an average price of $34.21 per share.
Outlook
Cooper Tire expects unit volume growth in the U.S to improve relative to the industry in the second quarter and be in line with the industry from the second half of the year.
Cooper Tire expects operating margin of the full-year 2017 to be at the high end of the previously announced mid-term target of 8-10%. First half of the year is expected to see margins at the low end of the guidance with the figure exceeding 10% in the second half. The International Tire Operations segment is expected to see improved operating profit this year, including its recent acquisition of GRT in China.
For 2017, capital expenditures are still expected between $220-$250 million. The effective tax rate for the year is expected to be 30-33%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.8% due to these changes.
VGM Scores
At this time, Cooper Tire & Rubber's stock has a subpar Growth Score of 'D'. However, its Momentum is doing a bit better with a 'C'. The stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Cooper Tire & Rubber (CTB) Down 7.8% Since the Last Earnings Report?
It has been about a month since the last earnings report for Cooper Tire & Rubber Company . Shares have lost about 7.8% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cooper Tire Q1 Earnings & Revenues Miss Estimates
Cooper Tire recorded earnings of $0.57 per share in the first quarter of 2017, which missed Zacks Consensus Estimate of $0.69. Net income came in at $31 million compared with $59 million in the first quarter of 2016.
Cooper Tire’s revenues decreased 1% to $643 million in this quarter from the year-ago figure of $650 million. The figure also missed Zacks Consensus Estimate of $687.9 million.
Operating profit was $49 million (7.6% of sales) in the first quarter of 2017 compared with $91 million (14% of sales) a year ago. Operating profit was negatively impacted by unit volume decline in North America, as well as volatile raw material costs and product pricing environment. This decrease was partly offset by unit volume increase in the International segment and Latin America.
The company’s shares lost 9.8% to close at $39.15 on Apr 27, reflecting worse-than-expected first-quarter results.
Segment Details
Americas Tire Operations recorded an 8.3% decrease in revenues to $531 million due to lower unit volume, adverse impact of foreign currency translations and unfavorable price and mix. Operating profit in this segment declined 40.4% to $63 million, while operating margin fell from 18.3% to 11.9%. Operating profits declined due to higher raw material costs, manufacturing costs, unfavorable price and mix as well as higher other costs, partially offset by improvement in tariff reversal and lower SG&A costs.
International Tire Operations reported a 37.5% rise in revenues to $142 million, mainly due to higher unit volume as well as favorable price and mix, partially offset by a negative foreign currency impact. Operating profit came in at $2 million against an operating loss of $2 million a year ago. The improvement was backed by higher volumes as well as favorable manufacturing and other costs, which was partly offset by higher SG&A expense and negative foreign currency translation.
Financial Position
Cooper Tire had cash and cash equivalents of $365 million as of Mar 31, 2017, down from $434 million as of Mar 31, 2016. Capital expenditures in the first quarter increased to $45 million in the first quarter of 2017 from $36 million a year-ago quarter.
Share Repurchases
In Feb 2017, Cooper Tire increased the share repurchase program by $300 million and extended it till Dec 2019. During the first quarter of 2017, the company spent $17.8 million on repurchasing 472,967 shares at a price of $37.63 per share. Since Aug 2014, Cooper Tire has bought back a total of 12.7 million shares at an average price of $34.21 per share.
Outlook
Cooper Tire expects unit volume growth in the U.S to improve relative to the industry in the second quarter and be in line with the industry from the second half of the year.
Cooper Tire expects operating margin of the full-year 2017 to be at the high end of the previously announced mid-term target of 8-10%. First half of the year is expected to see margins at the low end of the guidance with the figure exceeding 10% in the second half. The International Tire Operations segment is expected to see improved operating profit this year, including its recent acquisition of GRT in China.
For 2017, capital expenditures are still expected between $220-$250 million. The effective tax rate for the year is expected to be 30-33%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.8% due to these changes.
Cooper Tire & Rubber Company Price and Consensus
Cooper Tire & Rubber Company Price and Consensus | Cooper Tire & Rubber Company Quote
VGM Scores
At this time, Cooper Tire & Rubber's stock has a subpar Growth Score of 'D'. However, its Momentum is doing a bit better with a 'C'. The stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.