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

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

Volatility and Risk

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goodyear Tire & Rubber	0	1	4	2	3.14
Michelin	0	3	0	2	2.80

Goodyear Tire & Rubber currently has a consensus target price of $14.20, suggesting a potential upside of 31.36%. Given Goodyear Tire & Rubber’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Goodyear Tire & Rubber is more favorable than Michelin.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goodyear Tire & Rubber	$18.88 billion	0.16	$70.00 million	$0.84	12.87
Michelin	$29.43 billion	0.89	$2.04 billion	N/A	N/A

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

Institutional & Insider Ownership

84.2% of Goodyear Tire & Rubber shares are held by institutional investors. Comparatively, 3.3% of Michelin shares are held by institutional investors. 1.7% of Goodyear Tire & Rubber shares are held 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.

Profitability

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

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

Summary

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

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.

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.