Cooper Tire & Rubber Co. Earnings Cheat Sheet: Margins Suffer for Five Quarters Straight, Profit Drops

Rising costs hurt Cooper Tire & Rubber Co. (NYSE:CTB) in the third quarter as profit dropped from a year earlier. Cooper Tire & Rubber produces and markets passenger, light truck, medium truck, motorsport, and motorcycle tires that are sold nationally and internationally in the replacement tire market.

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Cooper Tire & Rubber Earnings Cheat Sheet for the Third Quarter

Results: Net income for the rubber and plastics company fell to $17.3 million (27 cents per share) vs. $44.6 million (71 cents per share) a year earlier. This is a decline of 61.3% from the year earlier quarter.

Revenue: Rose 19.3% to $1.05 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: CTB fell short of the mean analyst estimate of 33 cents per share. It beat the average revenue estimate of $1.01 billion.

Quoting Management: Roy Armes, Chief Executive Officer, commented, “We were able to show improvement in our margins during the third quarter even with the persistent challenges of high raw material costs and sluggish demand in key markets and product lines where we have significant exposure. Our sales growth resulted in the Company’s first quarter with over $1 billion of sales.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 5.7 percentage points to 8.8% from the year earlier quarter. Over that time, margins have contracted on average 3.8 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 14.7% to $922.2 million in the second quarter. The figure rose 20.1% in the first quarter from the year earlier and climbed 19% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the second quarter, net income fell 73.9% from the year earlier quarter.

The company has now fallen short of estimates in the last two quarters. In the second quarter, it missed expectations by 28 cents with net income of 18 cents versus a mean estimate of net income of 46 cents per share.

Looking Forward: Over the past ninety days, the average estimate for the fourth quarter has fallen from 77 cents per share to 34 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. At $1.11 per share, the average estimate for the fiscal year has fallen from $2.31 ninety days ago.

Competitors to Watch: AutoZone (NYSE:AZO), CarMax (NYSE:KMX), General Motors (NYSE:GM), Ford (NYSE:F), Toyota (NYSE:TM) and Goodyear Tire & Rubber Co. (NYSE:GT).

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(Source: Xignite Financials)