Should you hold on to your Cooper Tire position?

Cooper Tire Net Income Per Employee is projected to decrease significantly based on the last few years of reporting. The past year's Net Income Per Employee was at 11,056. The current year Average Assets is expected to grow to about 2.9 B, whereas Revenue Per Employee is forecasted to decline to about 294.9 K. As many baby boomers are still indifferent towards consumer cyclical space, it makes sense to go over Cooper Tire Rubber. We will evaluate why we are still optimistic in anticipation of a recovery. This post is to show some fundamental factors affecting Cooper Tire's products and services. I will also drop some light on how it may impact the investing outlook for Cooper Tire Rubber in September.
Published over a year ago
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Reviewed by Rifka Kats

The company reported the last year's revenue of 2.67 B. Total Income to common stockholders was 77.83 M with profit before taxes, overhead, and interest of 473.6 M. About 100.0% of the company shares are held by institutions such as insurance companies. Cooper Tire Rubber has price-to-book (P/B) ratio of 1.36. Some equities with similar Price to Book (P/B) outperform the market in the long run. The entity last dividend was issued on the 29th of May 2020. The firm had 2:1 split on the 1st of July 1992.

How important is Cooper Tire's Liquidity

Cooper Tire financial leverage refers to using borrowed capital as a funding source to finance Cooper Tire Rubber ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Cooper Tire financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Cooper Tire's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Cooper Tire's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Cooper Tire's total debt and its cash.

Detailed Perspective On Cooper Tire

Cooper Tire Rubber retains a total of 50.28 Million outstanding shares. The majority of Cooper Tire Rubber outstanding shares are owned by other corporate entities. These outside corporations are usually referred to as non-private investors looking to acquire positions in Cooper Tire Rubber to benefit from reduced commissions. Consequently, institutional investors are subject to a different set of regulations than regular investors in Cooper Tire. Please pay attention to any change in the institutional holdings of Cooper Tire Rubber as this could imply that something significant has changed or about to change at the company. Note that regardless of who owns the company, if the true value of the entity is less than the market is willing to pay for it, you may not be able to generate positive returns over time.
 2017 2018 2019 2020 (projected)
Consolidated Income96.75 M80.56 M98.32 M123.81 M
Direct Expenses2.34 B2.36 B2.32 B2.81 B

Ownership Breakdown

Institutions
99.58%
Retail Investors-0.46
Insiders0.88
Institutions99.58

Another setback for Cooper Tire investors

Cooper Tire current kurtosis builds up over 0.22. Cooper Tire Rubber currently demonstrates below-verage downside deviation. It has Information Ratio of 0.12 and Jensen Alpha of 0.57. However, we do advice investors to further question Cooper Tire Rubber expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Takeaway

Whereas some companies in the auto parts industry are either recovering or due for a correction, Cooper Tire may not be performing as strong as the other in terms of long-term growth potentials. Taking everything into account, as of the 3rd of August 2020, we believe Cooper Tire is currently overvalued. It barely shadows the market and projects below average probability of distress in the next two years. Our current 30 days buy-sell recommendation on the company is Strong Hold.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Cooper Tire Rubber. Please refer to our Terms of Use for any information regarding our disclosure principles.

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