Headquartered in Findlay, OH, Cooper Tire & Rubber (CTB) manufactures and markets passenger cars and light truck tires and related products. The company has approximately 8,000 employees and 52 manufacturing, distribution, retail stores, technical centers and office facilities located in more than one dozen countries around the world.

Their operations are divided into two business segments—Americas and International. Based on sales volume, they are the twelfth largest tire company globally and the fifth largest in the US.

Solid Quarterly Results and Upgraded Guidance

The company reported excellent Q4 results. Earnings increased to $1.04 per share from $0.45 per share in the prior-year quarter. Earnings were also significantly ahead of the Zacks Consensus Estimate of $0.73 per share.

Revenues also surpassed the Zacks Consensus Estimate, thanks to an increase in unit volume in both the Americas and International segments, partially offset by the adverse impact of price and mix, and currency headwinds.

Returning Cash to Shareholders

On February 19, the company announced its 176th consecutive quarterly dividend. They have also been returning cash to shareholders via buybacks. Their board recently increased the share repurchase program by up to $200 million through Dec. 31, 2017. The increased authorization is about 10% of the current market capitalization. 

Rising Estimates

Analysts have been raising their estimates for the company after stronger than expected results. Zacks Consensus Estimates for the current and next year are now $3.84 per share and $3.63 per share, up from $3.47 and $3.25 respectively, before the results.

The Bottom Line

The company has been shifting its product mix towards premium segments of the US markets as also raising its brand awareness. They have also increased their focus on Original Equipment Manufacturers (OEM) programs in the fast growing Chinese market. These initiatives will continue to drive growth in the coming years as global tire demand is expected to grow at 4.1% (CAGR) through 2020 with China alone accounting more 43% of volume growth (source: CTB presentation).

In addition to a top Zacks Stock Rank, the stock has Zacks Style Scores of “A” for Growth, Value as well as Momentum. Further the industry is currently ranked 4 out of 265 (top 2%), indicating significant chances of continued outperformance.