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Short-Term Report
May 11, 2004
Goodyear Tire & Rubber Comapny (NYSE) GT $ 8.13
52-week range $4.49-$11.97
Market Cap $1.14B
Shares Outstanding 175.3M
Book Value $3.27
Price/Book 2.45
Average Daily Vol. 2.80M
Target Price $13.00
Target Percentage 60%
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.
We are attracted to Goodyear Tire for the following reasons:
  • The newly restructured company has entailed a realignment of management functions and a closure of a number of plants. Consequently, Goodyear Tire has meaningfully improved its cost structure.
  • In addition to its operational restructuring, Goodyear Tire has substantially improved its dealer network, which is most important.
  • We believe that as the economy continues to improve, Goodyear Tire will participate as demand for tires for the OEM market and the replacement markets increases. Also, the specialty chemical business will improve as pricing firms up.
  • Recently the Chinese government has issued new regulation 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.
  • At its current price of $8.13 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.



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