Why Goodyear Tire & Rubber (GT) is on investors’ radar today

Goodyear Tire & Rubber (GT) has drawn fresh attention after a period of weak share returns, with the stock down 13% over the past month and 26% over the past 3 months.

At a recent closing price of US$6.10 and a market value of about US$1.8b, the company sits in a challenging spot, with a reported loss of US$2,085.0m on revenue of US$17,908.0m.

The recent 1 day share price decline of 1.61% and 30 day share price decline of 13.48% sit within a tougher backdrop, with the year to date share price return down 31.61% and the 1 year total shareholder return down 46.54%. This points to fading momentum as investors reassess both earnings risk and recovery potential.

If this shift in sentiment has you reassessing your watchlist, it could be a good moment to see what the market is pricing into 33 power grid technology and infrastructure stocks

With Goodyear reporting a US$2,085.0m loss on US$17,908.0m of revenue and the stock trading around US$6.10, you have to ask: is this weakness mispricing the business, or is the market already accounting for future growth?

Most Popular Narrative: 31.8% Undervalued

At a last close of $6.10 against a narrative fair value of $8.94, the widely followed view frames Goodyear as materially underpriced on modeled fundamentals.

The analysts have a consensus price target of $8.94 for Goodyear Tire & Rubber based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $6.6.

Curious what justifies that gap between today’s price and the modeled fair value? The story leans on a shift from deep losses to positive earnings and a re rated profit multiple. The exact revenue and margin path behind it is where the narrative gets interesting.

Result: Fair Value of $8.94 (UNDERVALUED)

However, this depends on risks related to weaker commercial truck demand and rising tariff and cost pressures, which could keep margins and earnings under real strain.

Another View: Cash Flows Paint A Tougher Picture

The analyst narrative points to a fair value of $8.94 and frames Goodyear as 31.8% undervalued. However, the SWS DCF model tells a very different story. On that cash flow view, the stock at $6.10 is trading above an estimated value of $2.68, which flags potential downside rather than upside. For you, the question is which set of assumptions feels more realistic for how this business will actually generate cash over time.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Goodyear Tire & Rubber for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mix of concern and optimism running through this story, it makes sense to move quickly, verify the figures independently, and evaluate both sides of the argument using our breakdown of 2 key rewards and 2 important warning signs

Looking for more investment ideas?

If you stop with just one stock, you miss the bigger picture, so use the screener to compare, test and pressure check every idea against fresh opportunities.

• Spot potential standouts early by scanning screener containing 22 high quality undiscovered gems that combine solid fundamentals with the chance to fly under most investors’ radar.
• Build a watchlist focused on resilience by filtering for 62 resilient stocks with low risk scores that score well on quality and financial risk metrics.
• Strengthen your core holdings by zeroing in on companies from the solid balance sheet and fundamentals stocks screener (46 results) that pair fundamentals with sturdier balance sheets.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.