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Behind KeyBanc Capital’s Upgrade of Cooper Tire & Rubber


Nov. 20 2020, Updated 3:56 p.m. ET

Cooper Tire & Rubber’s price movement

Cooper Tire & Rubber (CTB) has a market cap of $2.1 billion. CTB rose by 0.59% to close at $36.05 per share on April 7, 2016, bringing the stock’s weekly, monthly, and YTD (year-to-date) price movements to -2.6%, -6.2%, and -4.5%, respectively.

On the same day, CTB was trading 1.9% below its 20-day moving average, 2.4% below its 50-day moving average, and 4.2% below its 200-day moving average.

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ETFs and competitors

The PowerShares Dynamic Market Portfolio ETF (PWC) invests 0.41% of its holdings in CTB. The ETF tracks a quant-selected, tier-weighted index covering the entire US equity market. The YTD price movement of PWC was -1.6% as of April 6, 2016.

By comparison, 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% range of market cap, based on five value factors.

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

  • Boeing (BA)—$82.7 billion
  • Goodyear Tire & Rubber (GT)—$8.5 billion

KeyBanc’s upgrade and CTB’s performance in 4Q15 and 2015

KeyBanc Capital Markets has upgraded Cooper Tire & Rubber to “overweight” from “sector weight” and has set the price target at $43.0 per share.

CTB reported fiscal 4Q15 net sales of $775.5 million—a decline of 5.4% compared to its net sales of $819.6 million in fiscal 4Q14. Sales from its Americas tire segment rose by 3.2%, and sales from its International tire segment fell by 47.0% in fiscal 4Q15, as compared to fiscal 4Q14.

The company’s net income and EPS (earnings per share) fell to $59.2 million and $1.04, respectively, in fiscal 4Q15, as compared to $82.3 million and $1.39, respectively, in fiscal 4Q14.

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Fiscal 2015 results

In fiscal 2015, CTB reported net sales of ~$2.97 billion, a fall of 13.2% YoY (year-over-year). Its net income fell to $212.8 million, and its EPS rose to $3.69, in fiscal 2015 as compared to $213.6 million and $3.42, respectively, in fiscal 2014.

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


The company has made the following projections for fiscal 2016:

  • unit volume growth in each of its segments, as well as unit volume growth in US operations at or above the industry average
  • total company operating margin (excluding the impact of acquisitions) that is at the high end of its mid-term target of 8%–10%
  • improved operating profits from its international segment (excluding the impact of acquisitions)
  • an effective tax rate in the range of 34%–36%.
  • capital expenditures in the range of $240 million–$260 million, excluding the impact of any acquisitions.

For ongoing analysis of this sector, please visit Market Realist’s Consumer Discretionary page.


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