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Goodyear Tire & Rubber (NASDAQ:GT Investor Five-year Losses Grow to 41% as the Stock Sheds US$247m This Past Week

Simply Wall St ·  Oct 6, 2023 09:31

The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in The Goodyear Tire & Rubber Company (NASDAQ:GT), since the last five years saw the share price fall 44%. Furthermore, it's down 15% in about a quarter. That's not much fun for holders.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

See our latest analysis for Goodyear Tire & Rubber

Goodyear Tire & Rubber isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over five years, Goodyear Tire & Rubber grew its revenue at 7.8% per year. That's a fairly respectable growth rate. We doubt many shareholders are ok with the fact the share price has fallen 8% each year for half a decade. Clearly, the expectations from back then have not been satisfied. The lesson is that if you buy shares in a money losing company you could end up losing money.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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NasdaqGS:GT Earnings and Revenue Growth October 6th 2023

Take a more thorough look at Goodyear Tire & Rubber's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

We've already covered Goodyear Tire & Rubber's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Goodyear Tire & Rubber's TSR, which was a 41% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

Goodyear Tire & Rubber shareholders are up 4.2% for the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 7% endured over half a decade. It could well be that the business is stabilizing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for Goodyear Tire & Rubber you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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