Cooper Tire & Rubber Company (CTB) has surprised on estimates the last 3 quarters, including a huge beat in the second quarter. CTB trades with a forward P/E of 11.8.
Company Description
Cooper Tire manufactures tires for passenger cars, light and medium trucks. It also has subsidiaries that make motorcycle and racing tires. The company has facilities in 10 countries.
Cooper Beats Big in the Second Quarter
While the global recession is still hitting Cooper’s business, the company saw dramatically improved results in the second quarter. On Aug 5, Cooper reported earnings per share of 50 cents which blew by the Zacks Consensus Estimate of 4 cents per share by 1150%.
Sales continued to decline, however, falling to $632 million from $773 million in the year ago period. The sales decline was primarily due to lower volumes caused by the recession. The company saw some relief in the quarter through lower raw material costs.
Still, the company is facing many unknowns in the second half of 2009.
“While there are no guarantees that the macroeconomic environment will stabilize or rebound, we look forward to the impact of related operating leverage when economic conditions improve,” said Roy Armes, CEO.
“Because of the uncontrollable factors that affect the tire industry, we remain very cautious about the levels of future profitability,” he said.
Zacks Consensus Estimates Jump
Covering analysts have been scrambling to raise estimates since the better than expected second quarter results. The third quarter Zacks Consensus Estimate rose 21 cents to 55 cents in the last 30 days.
The full-year Zacks Consensus Estimate is looking equally bullish, rising 72% to $1.48 per share in the last month as all 4 analysts raised estimates. Analysts expect year over year earnings growth of 178.31% in 2009.
Value Fundamentals
Cooper Tire & Rubber Company is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 2.94.
Additionally, the company has a great track record of rewarding shareholders. It just recently announced the 150th consecutive quarterly dividend. The stock has a current yield of 2.40%.
