| 4StockTradersPress.com |
| A
Corporate Communications Corp. Publication ---- All Rights
Reserved |
| Short-Term
Report |
March 23, 2004 |
| |
|
|
| STRONG BUY |
|
|
| GOODYEAR TIRE AND RUBBER
CO. (NYSE) GT |
$ 7.40 |
| 52-week range |
$4.49-$11.97 |
| Market Cap |
$1.30BM |
| Shares Outstanding |
175.33M |
| Book Value |
$2.45 |
| Price/Book |
2.97 |
| Average Daily Vol. |
3.2M |
| Target Price |
$13.00 |
| Target Percentage |
76% |
| |
|
| |
|
|
| Goodyear
Tire is the world’s largest tire manufacturer. In addition
to tires, the company produces engineered rubber products such
as bumpers and specialty chemicals. |
| |
The stock of
Goodyear Tire has been an underperformer since our initial recommendation
at $7.20 per share on October 9, 2003. While part of this underperformance
can be traced to the somewhat poor market condition, of late;
the main culprit has been a delay in filing the annual report.
This delay was requested by Goodyear in order to thoroughly
complete its investigation into it’s accounting systems.
Goodyear has discovered some problems in its accounting system
which was caused by the installation of a new software program.
While this delay has caused a degree of uncertainty within the
investment markets, we do not believe there are any serious
problems.We believe the current price of $7.40 per share
is an overreaction to the uncertainty.
|
| |
| Our
positive posture on Goodyear Tire continues to be predicated
on the following factors: |
| |
- The newly restructured company has
entailed a realignment of management functions and a closure
of a number of plants. Consequently, Goodyear has meaningfully
improved its cost structure.
- In addition to its operational
restructuring, Goodyear has substantially improved its dealer
network, which is most important.
- Recently, the Chinese Government
has issued new regulations regarding extending credit to
consumers for automobile purchases. This is an important
development since the vast majority of Chinese consumers
normally purchase an automobile for 100% cash. The new regulations
will open the automobile market significantly for the fastest
growing economy. While this development is an obvious positive
for the automobile manufacturer, such as GM and Ford, it
will also benefit the tire manufacturers such as Goodyear
Tire.
|
At its current price of $7.40 per share, we believe the price
does not reflect the improving environment for Goodyear Tire
and thus we view the stock as undervalued. We are establishing
a target price of $13.00 per share. |
|
|
|
|
STOCKTRADERSPRESS.COM
|
| 135
Glenwood Road • Glenwood Landing, N.Y. 11547 •
(516) 656-0217 • 866-STP-NEWS • Fax (516) 656-9523 |