This 'tariff winner' sees stock jump 12%

Its relatively low exposure to tariffs gives it a significant advantage over its competitors.

Tariffs have taken a bite out of many companies’ earnings, but some have been able to negotiate the Trump Administration’s tariffs better than others.

One of them is Goodyear Tire and Rubber Co. (NASDAQ: GT). Goodyear stock is up 32% year-to-date and it got a big jolt on Monday as it rose 12%.

The catalyst on Monday was a bullish report from analysts at BNP Paribas Exane. BNP Paribas analyst James Picariello raised the price target to $15 per share, from the previous $11 per share target. That would suggest a roughly 25% return from its current $11.90 share price. He also upgraded the stock to outperform, from neutral.

The main reason for Picariello’s upgrade was its cost-advantages stemming from its lower exposure to tariffs than its competitors, according to Investing.com. Picariello said that only 12% of its tire sales are subject to the 25% tariffs on auto parts, since the bulk of their tires are made domestically.

Thus, Picariello estimated that this gave Goodyear a 10 percentage-point cost advantage, calling it a “true tariff winner,” according to Investing.com.

Significant earnings upside

The analyst also cited Goodyear’s efforts to streamline expenses through a $1.5 billion cost-saving initiative, and divest of underperforming assets, like its Dunlap brand and chemical business. These efforts are part of the Goodyear Forward initiative, which is anticipated to improve its segment operating margin to 10% by the end of the fiscal year, from the current 6.2%.

“We see significant support for GT to deliver meaningful price/mix-led earnings upside, which the market is underappreciating,” BNP Paribas analysts wrote in the upgrade, according to Trading View.

Goodyear stock now has a median price target among analysts of $15 per share, which is what BNP Paribas raised it to.

The stock is also very cheap, with a P/E ratio of 13, but a forward P/E of just 7, meaning it is undervalued in relation to its expected earnings over the next 12 months.

So even though its already up 32% YTD, Goodyear stock is poised to keep on rolling.