Insiders Like The Goodyear Tire & Rubber Company (GT) — Should You?

The exact reason why investors have been taking down The Goodyear Tire & Rubber Company (NASDAQ:GT) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 12 February, the shares dropped -0.13 points or -0.7 percent at $18.52 with a heavy trade volume of 5.063 million shares. After opening the session at $18.82, the shares went as high as $18.89 and as low as $18.38, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $4.74 billion and now has 256.2 million shares outstanding. The Goodyear Tire & Rubber Company (GT) stock has lost -12.93 percent of market value in 21 trading days.

GT stock has a trailing 3-year beta of 1.55, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $3.31 a share in the trailing twelve months. The stock’s value has fallen -9.26 percent year to date (YTD) against a decline of -38.25 percent in 12 month’s time. The company’s shares still trade -39.73 percent away from its 1-year high of $30.73 and 3.58 percent up from 52-week low of $17.88. The average consensus rating on the company is 2.3, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

The Goodyear Tire & Rubber Company (GT) will probably climb 26.24 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $26 price as 12-month high target. This represents a whopping 40.39 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $23, which represents a return potential of 24.19 percent when compared to the closing price of the stock of $18.52 on Tuesday, February 12. The lowest price target for the stock is $14 — slightly more than -24.41 percent from GT’s current share price.

History has shown that shares in The Goodyear Tire & Rubber Company have gone down on 21 different earnings reaction days and are predicted to add 0.06 percent when the company reports upcoming earnings. Investors will get their next glimpse of GT’s Q1 earnings on April 24. Analysts are forecasting revenue to suffer decline of -0.4 percent to $4.05B in the fiscal first quarter, while earnings are seen soaring by nearly -34.34 percent to $0.65 per share. It earned $0.68 per share, worse than the $0.75, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $3.88B, worse than the $4.05B analysts expected. Earnings are estimated to increase by -46.3 percent this year, 26.49 percent next year and continue to increase by 2.41 percent annually for the next 5 years.

Let’s take a look at some insider activity at The Goodyear Tire & Rubber Company (NASDAQ:GT) and see the pattern. The earliest insider trade took place on 12/01/2017. Kihn Jean Claude parted with a total of 7.5 thousand shares of company at average share price of $32.12. The total for the sales was set at $240.9 thousand. After this transaction, the Senior Vice President account balance stood at 51.99 thousand shares. The stock lost -41.94 percent since that insider sale. On 11/01/2017, Kihn Jean Claude, Senior Vice President, sold 7.5 thousand shares at a price per share of $30.53. This removed 228.98 thousand shares from the insider’s fortune and the stock saw a -38.91 percent retreat in value since the news became public. This transaction left 60.72 thousand shares in the Senior Vice President account.

On 10/02/2017, Senior Vice President Kihn Jean Claude performed a sale transaction worth $249.45 thousand. This sale at $33.26 each has eliminated 7.5 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -43.93 percent decrease since the transaction was reported. The insider now is left with 68.21 thousand shares remaining in the account. Kihn Jean Claude, who performs the Senior Vice President job, sold 7.5 thousand shares for $243.3 thousand. The disposal occurred on 09/18/2017 was priced at $32.44 per share. The share price plunged -42.51 percent since the reporting date. Kihn Jean Claude now left with a stake of 75.71 thousand GT stock worth $1.4 million after the insider selling.

The stock is currently hovering around the first support level of $18.3. Below this, the next support is placed in the zone of $18.09. Till the time, the GT stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 29.56 on daily chart, which may remain a cause for comfort. If the price breaks below $18.09 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $18.81 mark may result into a pull-back move towards $19.11 level.

Shares of The Goodyear Tire & Rubber Company (GT) are trading at a P/E ratio of 6.35 times earnings reported for the past 12 months. The industry GT operates in has an average P/E of 21.25. Its P/E ratio went as low as 3.25X and as high as 29.05 over the 5-year span.Further, it is sporting a 0.3 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.6. 23.1 percent is the gross profit margin for The Goodyear Tire & Rubber Company and operating margin sits at 6.6 percent. Along with this, the net profit margin is 1.7 percent.