What Are Moody’s New Ratings for Cooper Tire & Rubber Company?



Price movement of Cooper Tire & Rubber Company

Cooper Tire & Rubber Company (CTB) has a market cap of $2.0 billion. CTB rose by 1.5% to close at $36.87 per share on March 18, 2016. The stock’s price movements on weekly, monthly, and YTD (year-to-date) bases are -5.7%, 2.0%, and -2.3%, respectively.

Currently, CTB is trading 4.1% below its 20-day moving average, 0.88% above its 50-day moving average, and 2.0% below its 200-day moving average.

The PowerShares Dynamic Market Portfolio ETF (PWC) invests 0.41% of its holdings in CTB. The ETF tracks a tier-weighted index covering the entire US equity market.

The Vanguard Small-Cap Value ETF (VBR) invests 0.12% of its holdings in CTB. The ETF aims to track the CRSP US Small-Cap Value Index. The index selects from a list of stocks in the 85%–99% market cap range based on five value factors. VBR has risen 0.66% YTD, as of March 17, 2016.

The market caps of CTB’s competitors are as follows:

  • Boeing (BA): $88.8 billion
  • The Goodyear Tire & Rubber Company (GT): $8.7 billion
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Moody’s upgraded Cooper Tire & Rubber Company

Moody’s Investors Service has upgraded Cooper Tire & Rubber Company’s Corporate Family and Probability of Default ratings from B1 and B1-PD to Ba3 and Ba3-PD, respectively. Moody’s also upgraded the company’s senior unsecured notes from B2 to B1. CTB’s Speculative Grade Liquidity Rating was upgraded to SGL-2 from SGL-3, and its rating outlook is stable.

Performance of Cooper Tire & Rubber Company in 4Q15 and 2015

CTB reported 4Q15 net sales of $775.5 million, a fall of 5.4% compared to net sales of $819.6 million in 4Q14. Sales of the Americas tire segment rose 3.2%, and sales of the international tire segment fell 47.0% in 4Q15 compared to 4Q14.

Its net income and EPS (earnings per share) fell to $59.2 million and $1.04, respectively, in 4Q15, compared to $82.3 million and $1.39, respectively, in 4Q14.

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2015 earnings

In 2015, CTB reported net sales of $2,972.9 million, a fall of 13.2% year-over-year. Its net income fell to $212.8 million, and EPS rose to $3.69 in 2015, compared to $213.6 million and $3.42, respectively, in 2014.

Meanwhile, the company’s cash and cash equivalents and inventories fell 8.4% and 2.2%, respectively, in 2015. Its current ratio rose to 3.1x, and its debt-to-equity ratio fell to 1.5x in 2015 compared to a current ratio and a debt-to-equity ratio of 2.7x and 2.0x, respectively, in 2014.

The price-to-earnings and price-to-book value ratios of CTB are 10.0x and 2.1, respectively, as of March 18.

Projections for 2016

The company has made the following projections for 2016:

  • CTB expects unit volume growth in each of its segments, and unit volume growth in US operations is expected to be at or above the industry standard.
  • The total company operating margin, excluding the impact of acquisitions, is expected to be above the high end of its mid-term target of 8%–10%.
  • The international segment, excluding the impact of acquisitions, is expected to improve its operating profit in 2016.
  • The effective tax rate is expected to be in the range of 34%–36%.
  • Capital expenditures are expected to be in the range of $240 million–$260 million, excluding the impact of any acquisitions.

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