• If you are wondering whether Goodyear Tire & Rubber at around US$7.14 is a bargain or a value trap, the starting point is understanding what the current price actually implies.
• The stock has fallen 35.5% over the past year and is down 20.0% year to date, even though the last 30 days show a 10.9% gain after a 1.1% pullback over the past week.
• Recent headlines have focused on Goodyear Tire & Rubber as part of broader discussions about auto components companies and how investors are reassessing businesses that sit in cyclical parts of the market. This mix of long term pressure and short term interest helps explain why sentiment around the shares has been shifting.
• On Simply Wall St's valuation checks, Goodyear Tire & Rubber currently has a value score of 5 out of 6. The rest of this article will walk through what different valuation methods suggest about the stock, and will also point you to a more complete way to think about value at the end.

Approach 1: Goodyear Tire & Rubber Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those back to today to reach an implied value per share.

For Goodyear Tire & Rubber, the model used is a 2 Stage Free Cash Flow to Equity approach, based on projections in US$. The latest twelve month free cash flow is a loss of $182.8 million. Analyst estimates and subsequent extrapolations then point to free cash flow of $92.1 million in 2026 and $200.4 million in 2028, with further projected figures extending out to 2035, all expressed in millions rather than billions.

When all these projected cash flows are discounted back and added together, the DCF model indicates an estimated intrinsic value of about $7.64 per share. At a current share price around $7.14, this implies a discount of roughly 6.5%, which suggests the shares sit close to the model’s estimate of fair value rather than looking clearly cheap or expensive.

Result: ABOUT RIGHT

Goodyear Tire & Rubber is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Goodyear Tire & Rubber Price vs Sales

For companies where profits are weak or volatile, the P/S ratio is often a more useful yardstick than P/E, because it compares the share price to revenue, which tends to be more stable than earnings.

In general, higher growth expectations and lower perceived risk can justify a higher “normal” or “fair” P/S multiple, while slower growth and higher risk usually point to a lower one. It is therefore useful to compare the current P/S with the multiples at which similar businesses trade.

Goodyear Tire & Rubber is currently trading on a P/S of 0.11x. That sits well below the Auto Components industry average P/S of 0.70x and also below the peer group average of 7.10x. Simply Wall St’s proprietary “Fair Ratio” for Goodyear Tire & Rubber is 0.40x. This is the P/S level that model suggests could be appropriate after considering factors such as the company’s earnings profile, industry, profit margins, market value and risk indicators.

The Fair Ratio can be more informative than a simple peer or industry comparison, because it blends those reference points with company specific characteristics instead of assuming all businesses deserve the same multiple. With the current 0.11x P/S sitting below the 0.40x Fair Ratio, the shares appear undervalued on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Goodyear Tire & Rubber Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced as the simple story you attach to Goodyear Tire & Rubber’s numbers, where you set your own view on future revenue, earnings and margins, link that to a forecast and a fair value, then compare that fair value with today’s price, all inside Simply Wall St’s Community page, which millions of investors use. Because Narratives update automatically when new earnings, news or tariff headlines arrive, you can see in real time how a more confident view that lines up with a Fair Value of US$11.00 differs from a cautious stance closer to US$7.30, and decide which story, and which implied fair value range, fits your expectations best.

Do you think there's more to the story for Goodyear Tire & Rubber? Head over to our Community to see what others are saying!

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.