Here's How Investors Should Approach Goodyear Tire Stock Now

Core Viewpoint - Goodyear Tire is facing significant challenges, including high debt, rising costs, and intense competition, despite its strong market presence and ongoing transformation initiatives aimed at improving profitability and reducing leverage [2][3][9]. Company Overview - Goodyear Tire is a leading global manufacturer of tires, with operations in 20 countries and approximately 800 retail outlets, offering well-known brands such as Cooper, Dunlop, and Kelly [1]. Stock Performance - Goodyear's stock has declined by 17.5% over the past 12 months, underperforming the Zacks Auto, Tires and Trucks sector's growth of 5.1% and the S&P 500's return of 19.7% [2]. - The company's shares are currently undervalued, with a Value Score of A and a forward price/sales ratio of 0.15X, compared to the sector's 1.38X [6]. Transformation Initiatives - The Goodyear Forward transformation plan aims to optimize the company's portfolio, enhance margins, and reduce leverage, with expected annual run-rate benefits of $1.5 billion by the end of 2025 [9][10]. - Recent divestitures include the sale of the Dunlop brand for $526 million and the OTR tire business for $905 million [9]. Electrification Efforts - Goodyear is focusing on developing energy-efficient and eco-friendly tires, including the Goodyear ElectricDrive GT, to adapt to the evolving automotive landscape [11][12]. Challenges - The company faces ongoing challenges from inflation, with expected raw material cost increases of $350 million in the first half of 2025, and intense competition from low-cost imported tires [13][14]. - Revenue estimates for 2025 indicate a year-over-year decline, with first-quarter revenues projected at $4.45 billion (down 1.91%) and full-year revenues at $18.71 billion (down 0.87%) [15]. Market Position - Goodyear's shares are trading above the 50-day and 200-day moving averages, indicating a bullish trend, but persistent challenges suggest caution may be warranted [16][19].