Cooper Tire & Rubber Company (CTB), The Goodyear Tire & Rubber Company (GT): Why Are Tire Stocks Running Up?

Financial Ratios

Financial data shows that Cooper and Bridgestone have less debt and stronger financial ratios than Goodyear. Goodyear reported $6.3 billion in long-term debt with a debt-to-equity ratio of 8.85 and a debt-to-capital of 0.82.

Meanwhile, Cooper’s long-term debt was $326.88 million, with debt-to-equity ratio 0.38 and a debt-to-capital ratio of 0.28. And Bridgestone reported $4 billion in long-term debt with a debt-to-equity ratio of 0.25 and a debt-to-capital ratio of 0.26.

The Foolish bottom Line

Expect increased competition from Apollo’s entry into the U.S. tire market through its acquisition of Cooper Tire. Goodyear still has too much debt and can’t afford to pay a dividend. Bridgestone is stronger financially and is increasing its revenue, and looks like the clear winner in this space. Both Cooper and Goodyear have been losing sales in North America, though shares of Cooper, Goodyear and Bridgestone have risen substantially year-to-date through Aug. 21. Cooper and Goodyear seem overpriced.

The article Why Are Tire Stocks Running Up? originally appeared on Fool.com and is written by Michael Hooper.

Michael Hooper has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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