I received some insightful reactions to my Oct. 28 blog on Cooper Tire & Rubber Co. financials, which specifically addressed how the results were affected by tariffs on tire imports from China.

In the blog, I had said I would add John Healy's comments to my analysis when he published them. Healy is a managing director and research analyst with Northcoast Research Holdings LLC and author of Modern Tire Dealer's monthly "Your Marketplace" column.

But I decided to a address all the comments at once in another blog. First, Healy said Cooper's earnings came in better than expected.

"Cooper Tire reported 3Q '19 EPS of $0.58, beating our forecast of $0.52 and the Street’s estimate of $0.47.Similar to last quarter, Q3 had a number of moving parts as the impact of tariffs on the TBR (radial truck and bus tire) business, continued restructuring efforts in Europe, product liability swings, and tax rate items all moved in different directions."

Healy also said the global decline in Cooper's tire volume "is expected to end sooner rather than later as customer portfolio repositioning and private label portfolio exits begin to be anniversaried."

There were other positives (such as raw material cost pressures "appear to have moderated"), but in the end, Healy reduced his EPS estimates for 2019 and 2020:

Year Original estimate New estimate
2019 $1.81 $1.63
2020 $3.00 $2.86

"As we look to 2020, we see the global tire market as being one that is complicated with uncertain OE demand and likely pressures in the truck market. That said, we think Cooper profits in 2020 can improve over 2019 levels as production related realignments take hold along with the benefit of recent price actions.

"While we are bullish on Cooper’s ability to grow profits in 2020," said Healy, "we feel the stock is entering a range where a good portion of this optimism is priced into the shares."

Now for the comments to my blog. Jennifer Blake started it all by saying the blog was biased. I think she was basically saying Cooper's results, which were down in every major category if you compare the third quarter of 2018 to 3Q 2019, should stand on their own.

She is correct about the drop in Cooper's volume and how it relates to the tariffs, although my blog only addressed how much the tariffs can affect the results, which they did negatively. My doing so didn't turn Cooper's results from negative to positive, however, and neither did our write-up on the quarterly results.

Some of the other comments, from Dennis Ferguson to Dave Dowell, look at the issue from different perspectives. To view those comments, scroll to the end of my original blog, "By the Numbers: the Effect Tariffs Really Have on Tire Manufacturers," and check them out. And feel free to add to them!

As an aside, as I write this on Oct. 30, 2019, Cooper's stock is selling for $29.33 a share on the New York Stock Exchange.

Author

Bob Ulrich
Bob Ulrich

Editor, Retired

Editor Bob Ulrich has earned a reputation as an industry expert thanks to his insightful, in-depth articles and blogs on the tire industry. Before joining Modern Tire Dealer in 1985, Bob earned a B.A. in English literature from Ohio Northern University. Also, he graduated from the University of Akron School of Law with a J.D.

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Editor Bob Ulrich has earned a reputation as an industry expert thanks to his insightful, in-depth articles and blogs on the tire industry. Before joining Modern Tire Dealer in 1985, Bob earned a B.A. in English literature from Ohio Northern University. Also, he graduated from the University of Akron School of Law with a J.D.

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