February 27, 2019

GT – Market expectations are for Uniform ROA to remain at muted levels, but management is excited about Roll, and is confident about their premium brands, price mix, and tire durability

  • The Goodyear Tire & Rubber Company currently trades near recent lows relative to UAFRS-based (Uniform) Assets, with a 0.7x Uniform P/B, implying muted expectations for the firm. However, management is excited about the potential of Roll, and is confident about Tirehub’s ability to promote premium brands, their price mix, and the durability of tires for electric and commercial vehicles
  • Specifically, management generated an excitement marker when talking about Roll’s ability to reduce the complexity of the tire buying process. Additionally, they are confident in Tirehub’s ability to promote their premium brands, their Chinese customer base, and their focus on eliminating balance sheet deterioration. Moreover, they are confident their price increases have improved their price mix compared to raw material costs, and align them with industry peers. Finally, they are confident in their ability to manage durability of tires for electric and commercial vehicles
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