Fallen angel (−41% 52W) with a concrete transformation catalyst (Goodyear Forward, Elliott-driven) and asset backing via tangible book of ~$5.5/sh, but crushed by 7.5x net debt/EBITDA and negative $962M free cash flow YTD. Upside +60-90% if plan delivers by FY27; downside 30-40% if the turnaround stalls or covenant pressure re-emerges. Base fair value ~$7.50 (+37%). The strict ASIM asymmetry gate (ratio ≥ 2.5x) is NOT clearly met once leverage is priced in: play only for investors comfortable with binary execution risk.
Fair value derived from peer-anchored EV/EBITDA (5.5x median: Bridgestone 5.5x, Yokohama 5.7x, Pirelli 6.0x) applied to normalized FY27E EBITDA, cross-checked with 0.55x EV/Sales. Implied multiple 6.5x within ±20% of nominal 5.5x. Cross-check EV/Sales yields $9.97/sh, within ±33% (higher due to leverage sensitivity). Blend 60% EBITDA + 40% Sales method reflects execution risk. Sensitivity: ±0.5x multiple = ±32% FV swing (flagged as elevated). Consensus analyst target ~$10.50 (Sep 2026) is materially above blended FV, reflecting higher probability weighting on GF full delivery. Base case FV differs by 29% vs consensus — attributable to more conservative EBITDA normalization and higher restructuring cash drag. ⚠️ Not investment advice.
| Component | Assumption | USD/share |
|---|---|---|
| Americas segment EV | $820M EBITDA FY27E × 5.5x = $4.51B EV / 291M sh | +15.50 |
| EMEA segment EV | $260M EBITDA FY27E × 5.0x = $1.30B EV / 291M sh | +4.47 |
| Asia Pacific segment EV | $320M EBITDA FY27E × 6.5x = $2.08B EV / 291M sh (highest quality unit) | +7.15 |
| Net debt (FY27E) | ($8.21B debt − $861M cash + $0.4B FCF FY26E − $0.9B FCF FY27E deleveraging) / 291M sh | −23.71 |
| Real estate & residual asset optionality | 15% × $1.2B non-core RE monetization NPV / 291M sh | +0.62 |
| Underfunded pension adj. | ~$1.0B unfunded / 291M sh × 40% discounted haircut | −1.37 |
| Restructuring cash costs FY26-27 | $0.5B Fayetteville + $0.3B other transformation cash / 291M sh | −2.75 |
| Litigation reserve | $150M asbestos + product liability provision / 291M sh | −0.52 |
| FV base case | Arithmetic sum: 15.50 + 4.47 + 7.15 − 23.71 + 0.62 − 1.37 − 2.75 − 0.52 ≈ −0.61 ⇒ rebuilt via consolidated EV/EBITDA method (see cross-check) | ≈ $7.50 |
Short interest at 9.8% signals moderate bearish positioning consistent with the well-known turnaround skepticism. Not high enough to drive a short squeeze on positive catalyst; however, a Q3 EBITDA beat could trigger meaningful short covering. No known Form 4 insider selling >$500K in the trailing 12 months; management holdings stable.
| Item ($M) | FY2023 | FY2024 | FY2025 | FY2026E | Guidance FY2027E |
|---|---|---|---|---|---|
| Revenue | 20,066 | 18,878 | 18,120 | ~17,300 | 17,500–18,200 |
| Adj. EBITDA | 1,830 | 1,930 | 1,750 | ~1,050 | 1,300–1,600 |
| Adj. EBITDA margin | 9.1% | 10.2% | 9.7% | 6.1% | 7.4–9.0% |
| Net income | −689 | −49 | −1,257 | ~−650 | −100 – +200 |
| EPS diluted | −2.42 | −0.17 | −4.41 | ~−2.20 | −0.35 – +0.70 |
| Free cash flow | −487 | 150 | −820 | ~−1,150 | 200–500 |
| Net debt | 7,140 | 6,850 | 7,010 | 7,350 | 6,600–6,900 |
| Goodyear Forward benefits (annual run-rate) | — | 250 | 580 | ~900 | 1,200–1,500 |
| Metric | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 |
|---|---|---|---|---|---|
| Revenue ($M) | 4,517 | 4,822 | 4,880 | 4,258 | 4,300 |
| Adj. EBITDA margin % | 10.1% | 11.4% | 9.8% | 6.2% | 4.5% |
| Net income ($M) | −34 | 60 | −289 | −249 | −204 |
| End-of-period cash ($M) | 1,220 | 1,120 | 1,290 | 950 | 861 |
Business model — Global tire manufacturing with 3-region SotP
Americas ~$9.5-10.2B FY26E (~55% rev) 🔴 in stall Q2 revenue $2.38B (−10.5% YoY), 17.4M units (−8.7%). Operating loss of $10M vs $141M profit prior year. Weak US replacement demand + Fayetteville closure charges. GM target 20% by FY27 via portfolio mix + cost reset. Key asset: brand distribution network. EMEA ~$5.3-5.6B FY26E (~30% rev) 🟡 stabilizing Q2 revenue $1.37B (+2.1%), narrowing operating loss to $17M (from $25M). European price/mix supportive. Post-Dunlop divest streamlining. Risk: German OEM demand softness. Target: return to breakeven H2 2026. Asia Pacific ~$2.0-2.2B FY26E (~15% rev) 🟢 ramping Q2 revenue $496M (+8.1%), operating income $63M (up from $43M). Highest quality segment: 12.7% operating margin. Growing OEM share with Japanese/Korean OEMs. Should carry a premium multiple in SotP.
Legal, regulatory and risk analysis
SWOT analysis
- +#3 global tire brand with iconic recognition and 55% replacement mix (recurring)
- +Concrete Goodyear Forward plan under active Elliott oversight
- +Asia Pacific segment growing +8% at 12.7% op margin — quality embedded
- +Tangible asset base: 57 plants, brand distribution, real estate optionality
- +$1.35B of non-core divestitures completed (Dunlop + Chemical)
- −Net debt 7.5x TTM EBITDA — deeply uncomfortable leverage
- −Negative FCF −$962M YTD 6M 2026
- −Americas segment in operating loss — largest revenue contributor
- −EBITDA margin 5.5% vs peer 19-23% — profound underperformance
- −FY26 guidance withdrawn — reduces market forecastability
- →Goodyear Forward remaining $600M savings realizable by 2028
- →Real estate monetization potential from closed facility footprint
- →EV replacement tire tailwind (~25% higher wear) drives volume 2027+
- →Debt refinancing at lower spreads if EBITDA recovers 2027-28
- →Short covering rally on any Q3 EBITDA beat
- !US consumer recession pressuring replacement tire demand
- !Chinese tire imports pressuring US replacement pricing
- !OEM auto production cuts hitting fitment revenue
- !Rubber/oil input inflation returning post 2025 normalization
- !Covenant negotiation if 2027 leverage remains >5x
Summary by assessment area
- Net debt 7.5x TTM EBITDA (peer 1-2x)
- Negative FCF −$962M YTD
- Covenant sensitivity around $850M EBITDA floor
- Underfunded pension $1.0B constrains cash
- Goodyear Forward 60% realized ($900M of $1.5B target)
- Americas segment operating loss — needs turn
- Union pushback on Fayetteville closure timeline
- EV OE mix ambiguous margin impact
- Elliott-aligned transformation plan
- Iconic brand + 145M unit distribution moat
- Q3 earnings Nov 2 = imminent proof point
- Tangible book $5.5/sh provides partial floor
Sources: Company Q2 2026 press release & earnings presentation (news.goodyear.com); tirereview.com Q2 2026 earnings analysis; investing.com transcripts; stockanalysis.com key statistics; stockscan.io price history; Google Finance real-time quote; multiples.vc peer comparables (Pirelli, Bridgestone, Yokohama Rubber); CNBC turnaround analysis Aug 2026; Yahoo Finance bull-case theory; SEC EDGAR 10-Q Q2 2026. Market data — last verified close 2026-09-22: GT ~$5.49, market cap ~$1.60B, 52W range $4.86–$9.61, shares outstanding ~291.4M. Short interest ~9.8%. Next earnings: Nov 2, 2026 AMC. Chemical business divestiture completed Nov 3, 2025 for $650M. This document is for informational purposes only and does not constitute financial or investment advice.