Is Goodyear (GT) the Top Plastics and Rubber Stock to Buy According to Analysts?

The tire industry has been a hot topic among investors lately, with analysts keeping a close eye on the sector's top performers. One company that has caught the attention of analysts is The Goodyear Tire & Rubber Company (GT), a global leader in the tire industry with a history dating back over a century. But is Goodyear the best plastics and rubber stock to buy according to analysts? Let's dive into the data and find out.

Goodyear's earnings performance and growth prospects can be evaluated by analyzing its earnings per share (EPS) growth, segment operating income (SOI) margin, and analyst ratings. In Q2 2024, Goodyear reported adjusted EPS of $0.19, compared to a loss of $0.34 in the prior year's quarter, indicating a significant improvement. In Q3 2024, Goodyear reported adjusted EPS of $0.37, compared to $0.36 in the prior year's quarter, showing consistent growth. However, when compared to its peers, such as Bridgestone and Michelin, Goodyear's EPS growth is lower.

Goodyear's SOI margin has been improving consistently. In Q2 2024, the SOI margin was 7.2%, up ~70 bps YoY. In Q3 2024, the SOI margin was 7.2%, up ~300 bps YoY on a TTM basis. While Goodyear's SOI margin is lower compared to its peers, it has been improving consistently.

According to the information provided, the average rating for GT stock is "Buy" from 3 analysts, with a 12-month stock price forecast of $13.3, indicating a 41.79% increase from the latest price. This positive outlook from analysts reflects the company's strong performance and potential for future growth. However, when compared to its peers, Goodyear's analyst ratings and price targets are more optimistic compared to Bridgestone but less optimistic compared to Michelin.



One of the key factors contributing to Goodyear's investment potential is its Goodyear Forward transformation plan. This plan aims to create a more profitable enterprise and drive shareholder value creation. In the third quarter of 2024, the company reported benefits of $123 million from this transformation plan. The company has increased its target for gross run-rate gains from Goodyear Forward to $1.5 billion by the end of 2025, reflecting the plan's success.

Another factor to consider is Goodyear's portfolio optimization strategy. The company is focusing on its core businesses and improving profitability by selling underperforming brands and businesses. In 2024, the company announced the sale of its Dunlop brand to Sumitomo Rubber for $701 million. This sale is part of the company's strategy to optimize its portfolio and enhance its financial strength and flexibility.

In conclusion, while Goodyear's earnings performance and growth prospects show improvement, they lag behind its peers in the sector. However, Goodyear's consistent SOI margin improvement, positive analyst ratings, and strategic initiatives, such as the Goodyear Forward transformation plan and portfolio optimization, suggest that the company may be an attractive investment opportunity. Investors should consider these factors when evaluating Goodyear's investment potential and make informed decisions based on their individual investment goals and risk tolerance.