Cooper Tire & Rubber Co. is a replacement tire maker that became a Zacks #1 Rank (Strong Buy) on October 10.
There is currently a rumor that the company is in the process of being acquired, but earnings estimates have been trending higher for several months. With a price-to-sales (P/S) ratio of just 0.3, this stock is a true value pick.
Founded in 1913, Cooper Tire manufactures tires and related products for passenger vehicles and light trucks. The $1.2 billion company has more than 60 manufacturing, sales, distribution, technical and design facilities located in 10 countries across the globe. It is the ninth largest tire company in the world and the fourth largest in the U.S.
Robust Growth in Second Quarter
On August 9, Cooper Tire & Rubber reported a more than four-fold increase in profits to $51.7 million for the second quarter, compared to $11.5 million a year ago. This was the company’s 12th straight quarter of profitability. Earnings per share of 82 cents surpassed the Zacks Consensus Estimate by 64%.
The improvement in profits was mainly due to lower raw material costs. Other factors helping bottom line growth included higher sales volumes, improved manufacturing efficiencies and lower product liability costs.
Revenues increased 15% to $1.1 billion, driven by higher sales volumes in the North American and International operations. Sales in its North American tire division grew 16% while that in the international tire unit went up 6%.
Cooper believes product innovations, cost reduction measures, falling raw material costs and profitable investments will boost its earnings, despite the headwinds in the tire industry. The company will report its third-quarter results on November 2. The Zacks Consensus Estimate is currently at 87 cents per share, or about 11.5% higher than 3 months ago.
The Zacks Consensus Estimate for 2012 is up nearly 14% in the past three months to $2.56 per share, including a rise of 1.6% in the past 7 days. As for 2013, the Zacks Consensus Estimate of $2.99 is up almost 13% in 90 days and 4.5% in the past week. The estimates for 2012 and 2013 reflect year-over-year growth of 113.5% and 16.6%, respectively.
Source: http://www.forbes.com/sites/zacks/2012/10/12/cooper-rubber-may-hit-the-road-time-to-buy/
