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So far, so good for Goodyear

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If a stock is rated "Buy," and after first-quarter results are released it remains a "Buy," the company must be doing something right.

So it goes with Goodyear Tire & Rubber Co. Tire industry analyst Saul Ludwig maintained his stock rating, and raised the company's earnings per share (EPS) estimates for both 2011 and 2012.

He cites the following reasons for his optimism in 2011:

* favorable swings from volume;

* the proper handling of price/mix , which is offsetting raw material costs; and

* non-tire profits.

Ludwig, a managing director at Northcoast Research Holdings LLC, describes Goodyear's first-quarter results as "outstanding" (see "A good start: Goodyear posts profit in 1Q").

"One highlight of 1Q '11 that needs emphasis is that Goodyear’s 14.5% growth in North American replacement volume topped the 8% industry growth, so for the first time in many years, Goodyear gained share," he says.

"And keep in mind, Goodyear is selling high value add tires in an economy where there was fear of consumers trading down, but that did not happen with Goodyear’s tires.

"Goodyear still has much work to do, but it was most encouraging to see that our underlying confidence that it was moving in the right direction materialized in 1Q '11."

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