Goodyear Tire & Rubber (NASDAQ:GT) vs. Michelin (OTCMKTS:MGDDY) Critical Analysis

Michelin (OTCMKTS:MGDDY) and Goodyear Tire & Rubber (NASDAQ:GT) are both auto/tires/trucks companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Insider and Institutional Ownership

3.3% of Michelin shares are owned by institutional investors. Comparatively, 84.2% of Goodyear Tire & Rubber shares are owned by institutional investors. 1.7% of Goodyear Tire & Rubber shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Michelin and Goodyear Tire & Rubber”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Michelin	$29.43 billion	0.89	$2.05 billion	N/A	N/A
Goodyear Tire & Rubber	$18.88 billion	0.17	$70.00 million	$0.84	13.54

Michelin has higher revenue and earnings than Goodyear Tire & Rubber.

Risk & Volatility

Michelin has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Goodyear Tire & Rubber has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Profitability

This table compares Michelin and Goodyear Tire & Rubber’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Michelin	N/A	N/A	N/A
Goodyear Tire & Rubber	1.30%	5.31%	1.20%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Michelin and Goodyear Tire & Rubber, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Michelin	0	2	0	2	3.00
Goodyear Tire & Rubber	0	1	4	2	3.14

Goodyear Tire & Rubber has a consensus price target of $14.20, suggesting a potential upside of 24.84%. Given Goodyear Tire & Rubber’s stronger consensus rating and higher possible upside, analysts plainly believe Goodyear Tire & Rubber is more favorable than Michelin.

Summary

Goodyear Tire & Rubber beats Michelin on 9 of the 12 factors compared between the two stocks.

About Michelin

Compagnie Générale des Établissements Michelin SCA engages in the manufacture, distribution and sale of tires. Its products and services include tires, mobility services, lifestyle products, Michelin solutions and Michelin engineering and services. The company operates through the following segments: Passenger car and Light truck tires and related distribution, Truck tires and related distribution, and Specialty businesses. The company was founded by Aristide Barbier and Édouard Daubrée on July 15, 1863 and is headquartered in Clermont-Ferrand, France.

About Goodyear Tire & Rubber

Goodyear Tire & Rubber Co. engages in the development, manufacture, distribution, and sale of tires. It operates through the following geographical segments: Americas, Europe, Middle East, and Africa, and Asia Pacific. The Americas segment is involved in the development, manufacture, distribution, and sale of tires and related products and services in North, Central, and South America. The Europe, Middle East, and Africa segment focuses on the development, manufacture, distribution, and sale of tires for automobiles, trucks, buses, aircraft, motorcycles, earthmoving, mining, and industrial equipment throughout Europe, the Middle East, and Africa. The Asia Pacific segment refers to the development, manufacture, distribution, and sales of tires for automobiles, trucks, buses, aircraft, farm, earthmoving, mining, and industrial equipment throughout the Asia Pacific region. The company was founded by Frank A. Seiberling on August 29, 1898 and is headquartered in Akron, OH.