• Wondering whether Goodyear Tire & Rubber at around US$6.51 is a potential bargain or a value trap? This article walks through what the current price might be implying.
• The stock has been under pressure, with the share price down 5.2% over the last week, 8.4% over the last month, 27.1% year to date, and 40.7% over the past year. This may have changed how some investors think about both risk and opportunity.
• Recent headlines have focused on Goodyear Tire & Rubber in the context of broader auto component sector sentiment and company specific developments, which helps explain some of the share price weakness. Understanding what the market is reacting to is a useful starting point before comparing the stock price with different valuation estimates.
• On Simply Wall St's 6 point valuation checklist the company scores 4 out of 6. The next sections will walk through what various valuation approaches say about that score, then finish with a framework that can help you interpret those numbers in a more complete way.

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

A Discounted Cash Flow, or DCF, model estimates what a stock might be worth today by projecting future cash flows and then discounting them back to a present value using a required rate of return.

For Goodyear Tire & Rubber, the 2 Stage Free Cash Flow to Equity model starts with the latest twelve month free cash flow, which shows an outflow of around $324 million. Analysts and model estimates then project free cash flow turning positive, with $88 million of outflow expected in 2026, followed by inflows such as $114.35 million in 2027 and $104.3 million in 2028, all in $. Beyond the analyst horizon, Simply Wall St extrapolates cash flows through to 2035 using a set of gradual adjustments.

When all these projected cash flows are discounted back and combined, the model estimates an intrinsic value of about $2.68 per share. Compared with the recent share price around $6.51, this DCF output suggests the stock is 142.9% overvalued based on these assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Goodyear Tire & Rubber may be overvalued by 142.9%. Discover 49 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Goodyear Tire & Rubber Price vs Sales

For companies where earnings are weak or volatile, the P/S ratio is often a useful way to think about valuation because it focuses on revenue rather than profit, which can swing around more from year to year.

What investors usually pay for each dollar of sales depends a lot on expectations for future growth and the level of risk. Higher expected growth and lower perceived risk tend to support a higher P/S ratio, while slower growth or higher risk often go with a lower multiple.

Goodyear Tire & Rubber is trading on a P/S ratio of 0.10x. This sits well below the Auto Components industry average P/S of 0.68x and the peer average of 6.64x. Simply Wall St also provides a “Fair Ratio” of 0.44x, which is an estimate of what the P/S might be based on factors such as earnings growth, industry, profit margins, market cap and company specific risks.

This Fair Ratio can be more informative than a simple comparison with peers or the industry, because it tries to adjust for differences in growth, risk profile and business quality. Set against the current 0.10x P/S, the 0.44x Fair Ratio indicates that the stock appears undervalued using this framework.

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 think about valuation. Narratives on Simply Wall St take your view of Goodyear Tire & Rubber, link its story to a set of revenue, earnings and margin estimates, turn that into a Fair Value, then continuously update that view as new data like earnings or tariff news arrives. This lets you quickly compare Fair Value with the current price and see where you stand between a more optimistic narrative that lines up with a Fair Value of about US$11.00 and a more cautious one closer to US$7.30. All of this is available within an easy to use tool on the Community page that shows how different investors interpret the same stock.

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.