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Update Report
June 22, 2004
Update / STRONG BUY  
52-week range $4.49-$11.97
Market Cap $1.69B
Shares Outstanding 175.34M
Book Value $-0.075
Price/Book N/A
Average Daily Vol. 2.2M
Target Price $13.00
Target Percentage 35%
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.

Last Friday, Goodyear Tire reported first quarter operating results, which were quite good. While the company reported a small loss of $.44 per share, the loss was occasional by one time special charges totaling $.45 per share.


We continue to recommend Goodyear Tire for the following reasons:

  • On an operating basis, the company showed a profit in each of its 6 major segments. This is further proof that the restructuring program Goodyear Tire instituted has been successful and begun to bear fruit.
  • Most impressive is that the gross profit margins have improved dramatically mainly due to higher volumes and a richer product mix.
  • Revenues increased over 100% in the Asian market mainly due to the improving Chinese auto market.
  • A pleasant surprise was the strong profitability achieved in the company’s chemical division.
  • At its current price of $9.60 per share, we believe the price does not reflect the improved operating model of Goodyear Tire and thus we continue to view the stock as undervalued.
We are maintaining our target price of $13.00 per share.



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