Goodyear Tire and Rubber Company
GT
$7.21
+2.56%
Goodyear Tire & Rubber Company is a global manufacturer of rubber tires for automobiles, trucks, aircraft, and industrial equipment, operating primarily through its Americas, EMEA, and Asia Pacific segments. As one of the world's largest tire producers, it holds a strong brand presence but faces intense competition and cyclical demand tied to automotive and transportation markets. The current investor narrative centers on margin recovery from cost headwinds, with recent attention on how lower oil prices could reduce raw material costs and boost replacement tire demand, though the company continues to grapple with debt and uneven profitability.…
GT
Goodyear Tire and Rubber Company
$7.21
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Investment Opinion: Should I buy GT Today?
Rating: Hold. Goodyear is a high-risk turnaround play with deep value metrics but deteriorating fundamentals. The consensus analyst rating is hold with an average target of $7.46, implying only 2.3% upside. The thesis is that the stock is cheap but not yet compelling enough to buy given the negative earnings and cash burn.
Supporting Evidence: The trailing P/S of 0.14 is near an all-time low and well below industry averages, suggesting deep value. However, revenue declined 8.75% YoY, and the company posted a net loss of $249 million in Q1 2026. The forward P/E of 10.97x implies a sharp earnings recovery, but this is speculative. Free cash flow is negative on a TTM basis at -$126 million, and the debt-to-equity ratio of 2.24 is high. The analyst high target of $9.00 offers 23.5% upside, but the low target of $6.60 implies 9.5% downside, reflecting uncertainty.
Risks & Conditions: The biggest risks are continued revenue decline, inability to achieve profitability, and high debt burden. This Hold would upgrade to Buy if the company reports positive free cash flow and a return to net income in the next quarter, or if the P/S compresses below 0.10. It would downgrade to Sell if revenue growth decelerates further below -10% YoY or if the company announces a debt restructuring. Overall, Goodyear appears undervalued on a historical and peer basis, but the fundamental deterioration justifies caution.
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GT 12-Month Price Forecast
The AI assessment is bearish with medium confidence. Goodyear's fundamental deterioration — declining revenue, negative earnings, and cash burn — outweighs the deep valuation discount. The forward P/E of 10.97x relies on a sharp earnings recovery that seems uncertain given the current trajectory. While lower oil prices could provide a tailwind, the company's high debt and negative free cash flow pose significant risks. The base case of continued losses and range-bound trading is most likely. An upgrade to neutral would require evidence of a sustainable path to profitability, such as positive free cash flow and improving margins.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Goodyear Tire and Rubber Company's 12-month outlook, with a consensus price target around $7.46 and implied upside of +3.4% versus the current price.
Average Target
$7.46
0 analysts
Implied Upside
+3.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$7 - $9
Analyst target range
Seven analysts cover Goodyear, with a consensus recommendation of 'hold' (mean score 2.7 on a 1-5 scale where 1 is strong buy). The average target price is $7.46, implying a modest 2.3% upside from the current price of $7.29. The distribution shows 2 buys, 4 holds, and 1 sell (implied by the mean), indicating a cautious stance. The high target of $9.00 suggests potential for 23.5% upside, likely assuming margin recovery and lower raw material costs, while the low target of $6.60 implies a 9.5% downside, reflecting concerns about debt and demand. The spread between high and low ($2.40) is 32% of the average target, indicating moderate uncertainty. Recent ratings include a downgrade from Deutsche Bank (Buy to Hold) in May 2026, while JP Morgan and TD Cowen maintain Overweight/Buy. The mixed revisions suggest analysts are divided on the near-term outlook, with the hold consensus reflecting a wait-and-see approach.
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Bulls vs Bears: GT Investment Factors
Goodyear presents a classic value trap vs. turnaround debate. The bull case rests on deep valuation discounts (P/S 0.14, P/B 0.78, forward P/E 11x) and potential margin recovery from lower oil costs, which could drive significant upside if earnings normalize. The bear case is anchored by deteriorating fundamentals: revenue declining 8.75% YoY, negative net income, high debt (D/E 2.24), and negative free cash flow. The single most important tension is whether the company can return to profitability and generate positive free cash flow in the next 12 months. If it does, the stock could re-rate substantially; if not, the low valuation may persist or worsen. Currently, the bearish evidence is stronger given the negative earnings and cash burn, but the deep discount offers a high-risk, high-reward opportunity for contrarian investors.
Bullish
- Deep value at 0.14x sales: Goodyear's trailing P/S ratio of 0.14 is near its all-time low and well below typical auto parts peers (0.3-0.6x), suggesting the market is pricing in significant distress. If the company stabilizes, multiple expansion could drive substantial upside.
- Forward P/E implies earnings recovery: Despite negative trailing EPS, the forward P/E of 10.97x indicates analysts expect a sharp turnaround to profitability. Consensus EPS estimates of $1.99 for the next fiscal year, if realized, would justify the current price and offer upside.
- Lower oil costs boost margins: Recent news highlights that lower oil prices directly reduce Goodyear's raw material costs and can stimulate replacement tire demand. This tailwind could improve gross margins from the current 17.86% and help return to profitability.
- Analyst high target offers 23.5% upside: The analyst high target of $9.00 implies 23.5% upside from the current price of $7.29. While the consensus is hold, the high target reflects a scenario where margin recovery and cost tailwinds materialize.
Bearish
- Revenue declining 8.75% YoY: Q1 2026 revenue of $3.881 billion fell 8.75% from $4.253 billion a year ago, marking a deceleration. This broad-based decline raises concerns about market share loss and cyclical headwinds in the tire industry.
- Negative net income and cash burn: Goodyear reported a net loss of $249 million in Q1 2026, swinging from a profit of $115 million in Q1 2025. Free cash flow was -$893 million in Q1, and operating cash flow was -$718 million, indicating severe cash burn.
- High debt burden with D/E of 2.24: A debt-to-equity ratio of 2.24 indicates high leverage, and interest expense of $95 million in Q1 2026 consumes a significant portion of operating income. This financial risk limits flexibility and increases vulnerability to downturns.
- Negative ROE of -53.2%: Return on equity is deeply negative at -53.2%, reflecting the company's inability to generate profits on shareholder equity. This metric signals poor capital allocation and a distressed financial state.
GT Technical Analysis
Goodyear is in a sustained downtrend, with a 1-year price change of -33.18% and the current price of $7.29 representing 62.6% of its 52-week range ($5.43 low to $11.65 high). Trading near the lower end of the range suggests bearish sentiment and potential value territory, but the stock has not yet confirmed a reversal. The 52-week low of $5.43 was set in May 2026, and the stock remains 37.4% below the high, indicating persistent selling pressure. Over the past 1 month, the stock has rallied 18.34%, while the 3-month change is +3.26%, showing a short-term bounce that contrasts with the 1-year decline. This divergence could signal a potential trend reversal or a temporary relief rally, especially as the 1-month relative strength vs. SPY is +18.03%, outperforming the market. However, the 3-month relative strength is -1.41%, suggesting the medium-term momentum is still weak. The 52-week high of $11.65 acts as major resistance, while the 52-week low of $5.43 provides support. A breakout above $11.65 would signal a bullish reversal, while a breakdown below $5.43 could accelerate losses. Beta of 1.117 indicates slightly higher volatility than the market, meaning the stock tends to amplify market moves, which is important for risk management.
Beta
1.12
1.12x market volatility
Max Drawdown
-51.7%
Largest decline past year
52-Week Range
$5-$11
Price range past year
Annual Return
-36.1%
Cumulative gain past year
| Period | GT Return | S&P 500 |
|---|---|---|
| 1m | +14.6% | +0.8% |
| 3m | +2.1% | +3.5% |
| 6m | -25.0% | +7.2% |
| 1y | -36.1% | +16.5% |
| ytd | -19.2% | +8.4% |
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GT Fundamental Analysis
Revenue in Q1 2026 was $3.881 billion, down 8.75% year-over-year from $4.253 billion in Q1 2025, marking a deceleration after prior quarters showed mixed trends. The trailing twelve-month revenue trend shows a decline from $4.917 billion in Q4 2025 to $3.881 billion in Q1 2026, indicating softening demand. The company's revenue segments are not detailed beyond chemical sales ($7 million) and other ($4 million), so the drag appears broad-based. The negative growth raises concerns about market share and cyclical headwinds. Net income in Q1 2026 was -$249 million, swinging from a profit of $115 million in Q1 2025, with EPS of -$0.86. Gross margin contracted to 17.86% from 17.40% a year ago, but operating margin fell sharply to 0.64% from 2.12%, reflecting cost pressures. The company has been unprofitable on a TTM basis, with net margin of -6.42% in Q1 2026, though it had positive net income in Q4 2025 ($105 million) and Q2 2025 ($254 million). The trajectory shows volatility, but the recent loss is a setback. Goodyear has a debt-to-equity ratio of 2.24, indicating high leverage, and free cash flow was -$893 million in Q1 2026, worsening from -$797 million in Q1 2025. The current ratio of 1.06 suggests tight liquidity, and ROE is deeply negative at -53.2%. The company generated negative operating cash flow of -$718 million in Q1 2026, highlighting reliance on external financing. The TTM free cash flow of -$126 million underscores cash flow challenges, though Q4 2025 showed a positive $1.335 billion, indicating seasonal swings.
Quarterly Revenue
$3.9B
2026-03
Revenue YoY Growth
-8.8%
YoY Comparison
Gross Margin
17.9%
Latest Quarter
Free Cash Flow
$-126000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is GT Overvalued?
Since net income is negative (TTM EPS -$0.68), the trailing P/E is not meaningful, so we use the price-to-sales (P/S) ratio. The trailing P/S is 0.14, while the forward P/E of 10.97 suggests the market expects a return to profitability. The gap between the negative trailing P/E and positive forward P/E implies analysts anticipate a sharp earnings recovery. Goodyear's P/S of 0.14 is significantly below the industry average (not provided, but typical auto parts P/S ranges 0.3-0.6), indicating a deep discount. The EV/Sales of 0.53 also suggests undervaluation relative to peers. The P/B of 0.78 is below 1.0, implying the market values the company below its book value, often a sign of distress or low growth expectations. Historically, Goodyear's P/S has ranged from about 0.14 to 1.19 over the past five years. The current P/S of 0.14 is near the all-time low, suggesting the market is pricing in pessimistic scenarios. The P/B of 0.78 is also near the lower end of its historical range (0.54 to 1.21), indicating the stock is trading at a significant discount to its own history, which could either represent a value opportunity or reflect fundamental deterioration.
PE
-1.5x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 3x~16x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
6.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Goodyear's financial health is precarious. The company reported a net loss of $249 million in Q1 2026, with negative free cash flow of -$893 million and operating cash flow of -$718 million. The debt-to-equity ratio of 2.24 indicates high leverage, and interest expense of $95 million per quarter eats into already thin operating income. The current ratio of 1.06 suggests tight liquidity, and the negative ROE of -53.2% reflects severe profitability issues. Revenue declined 8.75% YoY, and gross margin at 17.86% is low, leaving little room for error. If the company cannot reverse these trends, it may face liquidity constraints or covenant breaches.
Market & Competitive Risks: Goodyear operates in a cyclical industry tied to automotive and transportation demand. With a beta of 1.117, the stock amplifies market moves, making it vulnerable to macro downturns. The stock is trading near its 52-week low of $5.43, reflecting deep pessimism. The P/S of 0.14 is at the low end of its historical range, suggesting the market is pricing in a distressed scenario. Competitive pressures from rivals like Michelin and Bridgestone, along with potential shifts to electric vehicles that require different tires, pose long-term threats. The recent Deutsche Bank downgrade from Buy to Hold highlights analyst skepticism.
Worst-Case Scenario: In a worst-case scenario, continued revenue declines, margin compression, and inability to generate positive free cash flow could lead to a debt restructuring or equity dilution. The stock could retest its 52-week low of $5.43, representing a 25.5% decline from the current price of $7.29. If the company reports another quarter of significant losses and negative cash flow, analyst downgrades could push the stock below $5.00, implying a potential loss of over 30%. The historical max drawdown of -51.69% suggests that in severe downturns, the stock can lose more than half its value.
FAQ
The key risks are financial, operational, and market-related. Financially, Goodyear has high debt (D/E 2.24) and negative free cash flow (-$893 million in Q1 2026), which could lead to liquidity issues. Operationally, revenue is declining 8.75% YoY, and the company posted a net loss of $249 million in Q1. Market risks include cyclical demand tied to automotive and transportation, with a beta of 1.117 amplifying market downturns. Company-specific risks include potential debt covenant breaches or equity dilution. The most severe risk is a continued deterioration leading to a stock price decline to the 52-week low of $5.43 or below, representing a 25.5% loss from current levels.
The 12-month forecast is uncertain, with three scenarios. The base case (50% probability) sees the stock trading in a range of $6.60 to $7.50, near the analyst average target of $7.46, as the company continues to struggle but avoids disaster. The bull case (20% probability) targets $8.50 to $9.00, driven by lower oil costs and a return to profitability. The bear case (30% probability) sees the stock falling to $5.00 to $6.00, testing the 52-week low of $5.43, if losses deepen. The most likely scenario is the base case, assuming no major improvement or deterioration. Key assumptions include revenue stabilizing and margins improving modestly.
Goodyear appears undervalued based on traditional multiples. Its trailing P/S of 0.14 is near an all-time low and well below typical auto parts peers (0.3-0.6x). The P/B of 0.78 indicates the stock trades below book value, often a sign of distress. The forward P/E of 10.97x suggests the market expects a return to profitability, but this is speculative given current losses. Historically, GT's P/S has ranged from 0.14 to 1.19, so the current level is at the bottom of that range. The deep discount implies the market is pricing in a pessimistic scenario, but if the company stabilizes, the stock could be significantly undervalued. However, the low valuation is justified by negative earnings and cash burn.
Goodyear is a high-risk, high-reward stock that may appeal to contrarian value investors. The stock trades at a deep discount with a P/S of 0.14 and P/B of 0.78, near historical lows. However, the company is currently unprofitable, with negative net income of -$249 million in Q1 2026 and negative free cash flow. The analyst consensus is hold, with an average target of $7.46, implying only 2.3% upside. The biggest downside risk is continued revenue decline and cash burn, which could push the stock to its 52-week low of $5.43 or lower. For investors with a high risk tolerance and a long-term horizon, it could be a speculative buy if they believe in a turnaround. For most investors, waiting for evidence of sustainable profitability is prudent.
Goodyear is more suitable for short-term trading or speculative long-term investing with a high risk tolerance. The stock has high volatility (beta 1.117) and has shown sharp moves, such as the 18.34% rally in the past month. Short-term traders could capitalize on momentum, but the downtrend over the past year (-33.18%) suggests caution. For long-term investors, the deep valuation could offer a multi-year opportunity if the company turns around, but the negative earnings and cash burn make it a risky hold. A minimum holding period of 2-3 years would be needed to allow for a potential recovery, but investors must be prepared for significant drawdowns. The stock pays no dividend, so total return depends solely on price appreciation.
