• If you are wondering whether Goodyear Tire & Rubber's current share price reflects its real worth, you are not alone. This article focuses squarely on what the numbers say about value.
• The stock recently closed at US$9.45, with returns of 0.9% over the last 7 days, 7.4% over 30 days, 5.9% year to date, and 4.2% over 1 year, while the 3 and 5 year returns of 17.9% and 18.5% declines show a much tougher longer term picture.
• These mixed returns sit against a backdrop of ongoing interest in the auto and tire space, where investors continue to weigh company specific factors and sector wide trends when assessing risk and opportunity. That context makes it useful to step back from the headlines and focus on what different valuation tools are signaling about Goodyear Tire & Rubber today.
• Simply Wall St currently gives Goodyear Tire & Rubber a valuation score of 5/6, based on how often the shares screen as undervalued across six valuation checks. Next we will look at what traditional approaches like DCFs and multiples are saying, then finish with a more holistic way to think about valuation overall.

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

A Discounted Cash Flow, or DCF, model estimates what a business could be worth by projecting its future cash flows and then discounting them back to today to get a present value per share.

For Goodyear Tire & Rubber, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $437.4 million, so the model leans heavily on future projections. Analysts provide free cash flow estimates out to 2027, with Simply Wall St extrapolating further. The ten year projections run from $140 million in 2026 to $778.4 million in 2035, all in US$. These future cash flows are discounted back to today and summed.

The result is an estimated intrinsic value of about $17.76 per share, compared with a recent share price of $9.45. That gap indicates the stock is around 46.8% undervalued based on this DCF model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Goodyear Tire & Rubber is undervalued by 46.8%. Track this in your watchlist or portfolio, or discover 876 more undervalued stocks based on cash flows.

Approach 2: Goodyear Tire & Rubber Price vs Sales

For many profitable companies, price based multiples are a simple way to check whether the market price looks reasonable relative to the business they generate. The idea is that a higher or lower multiple can often be tied back to what investors expect for future growth and how much risk they see in the business, which is why there is no single “right” P/S ratio for every company.

For Goodyear Tire & Rubber, the preferred metric is the P/S ratio. The shares currently trade on a P/S of 0.15x, compared with the Auto Components industry average of 0.78x and a peer group average of 10.68x. Simply Wall St’s Fair Ratio for Goodyear Tire & Rubber is 0.54x, which reflects a proprietary view of what the P/S might be, given factors such as earnings growth, industry, profit margin, market cap and company specific risks.

This Fair Ratio can be more useful than a simple industry or peer comparison because it adjusts for differences in fundamentals rather than assuming all companies should trade on similar multiples. With the actual P/S of 0.15x sitting well below the 0.54x Fair Ratio, the shares screen as undervalued on this measure.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

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

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company linked directly to numbers like fair value, future revenue, earnings and margins.

On Simply Wall St’s Community page, Narratives let you set out what you think is happening at Goodyear Tire & Rubber, connect that story to a forecast, and then see the fair value that drops out of those assumptions.

Once you have a Narrative, you can compare your fair value to the current share price to help you decide whether the stock looks interesting to you or whether it might be one to avoid for now.

Narratives update automatically when new information such as earnings or news is added. With Goodyear Tire & Rubber, you might see one investor using conservative revenue and margin assumptions and landing on a fair value closer to the current US$9.45 share price. Another investor may use more optimistic estimates and arrive at a much higher figure. This shows how different perspectives can coexist on 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.