Breaking Down The Goodyear Tire & Rubber Company (GT) Financial Health: Key Insights for Investors

You're looking at Goodyear Tire & Rubber Company's recent Q3 2025 earnings and, honestly, the headline number is a shocker: a massive reported net loss of $2.2 billion. But before you panic-sell, you have to look past the non-cash charges-like the $1.4 billion deferred tax asset valuation allowance and a $674 million goodwill impairment-to see the real operational story. The core business actually delivered an adjusted earnings per share of $0.28, which comfortably beat the analyst consensus of $0.21, showing their 'Goodyear Forward' restructuring is defintely working, delivering $185 million in segment operating income benefits for the quarter. Still, the overall picture is complex: net sales were $4.6 billion, down 3.7% year-over-year due to lower volumes, and with long-term debt last reported at $7.302 billion in Q1 2025, the company's aggressive asset sales, like the Off-the-Road (OTR) tire business, are crucial for deleveraging and stabilizing the balance sheet against a backdrop of global trade disruption and high channel inventories.

Revenue Analysis

You're looking at The Goodyear Tire & Rubber Company (GT) revenue, and the headline figure-a decline-can be misleading. The direct takeaway is that while net sales for the trailing twelve months (TTM) ending Q3 2025 were $18.31 billion, down 3.87% year-over-year, this dip is largely a result of a strategic portfolio cleanup, not just weak demand. The company is intentionally shedding non-core assets to focus on higher-margin tire business, so the drop is actually a sign of the 'Goodyear Forward' transformation plan in action.

The primary revenue stream remains the sale of tires, split across three major geographical segments. In the third quarter of 2025, The Goodyear Tire & Rubber Company reported total net sales of $4.6 billion. This figure was down 3.7% compared to the same quarter last year, a decline driven by lower overall volume and the significant sale of the Off-the-Road (OTR) tire business. Price/mix improvements provided a $100 million benefit in the quarter, which helped mitigate the volume and divestiture headwinds.

Segment Contribution and Strategic Shifts

Breaking down the Q3 2025 net sales reveals where the company is strongest and where the strategic restructuring is having the most immediate impact. The Americas segment remains the largest contributor, but all segments show the effects of the company's portfolio optimization (divestitures). That's the real story here.

• Americas: Net sales were $2.7 billion in Q3 2025, a 4.2% decline year-over-year. This was mainly due to a drop in replacement volume, though positive price/mix partially offset it.
• Asia Pacific: Net sales were $501 million, a sharp 18.9% decrease. This substantial drop was directly driven by the sale of the OTR tire business, plus lower overall volume.
• Europe, Middle East, and Africa (EMEA): Based on the total net sales, the EMEA segment contributed approximately $1.4 billion in Q3 2025. (Here's the quick math: $4.6B total sales minus $2.7B Americas and $0.501B Asia Pacific).

The most significant change in The Goodyear Tire & Rubber Company's revenue structure is the deliberate exit from non-core businesses. The company completed the sale of the OTR tire business in February 2025 for gross cash proceeds of $905 million, and also completed the sale of its Chemical business and the Dunlop brand in certain regions. These divestitures, which are expected to generate gross proceeds in excess of $2 billion, are reducing the top-line revenue now but are crutial for deleveraging the balance sheet and improving future operating margin. If you want a deeper dive into the balance sheet impact, check out Breaking Down The Goodyear Tire & Rubber Company (GT) Financial Health: Key Insights for Investors.

The table below summarizes the most current revenue data, showing the impact of the strategic moves.

What this estimate hides is the impact of the 'Goodyear Forward' plan, which delivered $185 million in segment operating income benefits in Q3 2025 alone, offsetting some of the revenue pressure. That cost control is defintely a critical counter-trend to watch.

Profitability Metrics

You're looking for a clear picture of The Goodyear Tire & Rubber Company (GT)'s core profitability, and honestly, the 2025 numbers show a company in deep transition. The headline is that while strategic asset sales have boosted reported net income in the short term, the core operating margins remain razor-thin and trail the industry, despite significant cost-saving efforts.

For the first nine months of 2025, The Goodyear Tire & Rubber Company reported approximately $13.35 billion in Net Sales (Q1: $4.25 billion, Q2: $4.5 billion, Q3: $4.6 billion). The reported net income figures are heavily skewed by non-cash charges and gains from divestitures. For a clearer view of core business performance, we look at the Adjusted Net Income for the first nine months of 2025, which was only $23 million. This translates to a 9-month Adjusted Net Profit Margin of a mere 0.17%. That's a tough environment for any manufacturer.

Gross, Operating, and Net Profit Margins

To get a sense of where The Goodyear Tire & Rubber Company stands, we need to break down the margins. The Trailing Twelve Months (TTM) Operating Margin, as of November 2025, is sitting at a critically low 0.82%. This indicates that after accounting for the cost of goods sold and all operating expenses, very little is left before interest and taxes. The Q1 2025 Gross Profit Margin was 17.40%, and in Q2 2025, Gross Profit was $760 million on $4.465 billion in Net Sales.

Here's the quick math on how The Goodyear Tire & Rubber Company's core margins stack up against the most recent available industry averages for the 'Tires and Inner Tubes' sector (2024 data):

What this estimate hides is the volatility. While the Net and Operating Margins appear better than the negative industry average, the industry average itself reflects a challenging year in 2024. The 0.82% TTM Operating Margin for The Goodyear Tire & Rubber Company is a clear signal that cost management is a constant, difficult battle, especially with raw material inflation and a surge of low-cost imports impacting the business.

Operational Efficiency and Cost Management

The company's operational efficiency is being driven by the 'Goodyear Forward' transformation plan. This initiative is critical to margin expansion. In Q2 2025 alone, the plan delivered a substantial $195 million in Segment Operating Income benefits. This continued into Q3 2025, contributing another $185 million in benefits. The goal is to hit approximately $1.5 billion in annualized run-rate benefits by the end of 2025.

• Cost Headwinds: Raw material costs and general inflation remain a headwind, totaling $127 million in Q2 2025.
• Gross Margin Trend: The gross margin is holding near the industry average, but the pressure point is below the gross profit line, in the Selling, Administrative, and General (SG&A) expenses and other operating costs.
• Actionable Insight: The success of the $1.5 billion cost-saving target is defintely the single most important factor for margin expansion in 2026.

The strategic divestitures, like the sale of the Dunlop brand and the Off-the-Road (OTR) tire business in 2025, are designed to simplify the business and focus on higher-margin segments, which should structurally improve future margins. The Q2 2025 Net Income of $254 million was significantly higher than the prior year, but this was largely due to a non-core gain on the sale of the Dunlop brand, estimated at $385 million. You can't count on asset sales for recurring profitability, so the focus must remain on the Segment Operating Income growth.

For a full picture of the company's financial standing, you should review the companion post: Breaking Down The Goodyear Tire & Rubber Company (GT) Financial Health: Key Insights for Investors

Debt vs. Equity Structure

The Goodyear Tire & Rubber Company (GT) relies heavily on debt financing, a clear sign of significant financial leverage that investors need to watch closely. As of the third quarter ending September 2025, the company's Debt-to-Equity (D/E) ratio stood at approximately 3.05, which is a high figure for the sector.

This high ratio means that for every dollar of shareholder equity, the company has taken on about $3.05 in total debt. Here's the quick math on the balance sheet for that September 2025 quarter:

• Total Long-Term Debt & Capital Lease Obligation: $8,177 million
• Total Short-Term Debt & Capital Lease Obligation: $996 million
• Total Stockholders Equity: $3,005 million

To be fair, a high D/E ratio is not uncommon in capital-intensive industries like tire manufacturing, but The Goodyear Tire & Rubber Company's leverage is notably higher than its peers. For context, the median D/E ratio for the Tires and Inner Tubes industry was around 1.40 in 2023. Your investment decision defintely needs to factor in this elevated risk profile.

The company is actively managing this debt load, often using new debt to refinance existing obligations. In May 2025, The Goodyear Tire & Rubber Company announced a public offering of 5-year senior notes, totaling $500 million, to help redeem a portion of its 5.000% Senior Notes due in 2026. This is a common move to push out maturity dates and manage interest expense, but it doesn't fundamentally reduce the principal debt amount.

The credit rating agencies reflect this high leverage, but also recognize the company's efforts to improve its financial position through its Goodyear Forward initiative. In May 2025, Moody's Ratings affirmed the company's B1 corporate family rating and, importantly, revised the outlook to stable from negative. Similarly, S&P Global Ratings affirmed a 'B+' Local Currency LT credit rating with a stable outlook in June 2025.

This stability in the rating outlook is a good sign, suggesting the agencies believe the company can execute its plan to improve operating margins and reduce financial leverage. The company is balancing between debt financing and equity funding by aggressively using debt, but is signaling a shift toward debt reduction, including plans to use proceeds from the sale of its chemical business, expected to close in 2025, for further debt repayment.

For a deeper dive into the company's overall financial picture, including its valuation and strategic frameworks, you should read the full post: Breaking Down The Goodyear Tire & Rubber Company (GT) Financial Health: Key Insights for Investors.

Liquidity and Solvency

When you're looking at a company like The Goodyear Tire & Rubber Company (GT), you need to know if it can cover its near-term bills. That's liquidity, and honestly, their position is tight but improving, largely thanks to strategic asset sales. It's a transition year, so you defintely have to look beyond the ratios.

The core liquidity metrics tell a story of a manufacturing giant managing inventory. As of the second and third quarters of 2025, The Goodyear Tire & Rubber Company's Current Ratio stood at about 1.15. This means they have $1.15 in current assets for every $1.00 in current liabilities. That's acceptable, but it's not a huge buffer, especially when you compare it to the industry median of around 1.51.

More telling is the Quick Ratio (or acid-test ratio), which strips out inventory-a slow-moving asset for a tire company. This ratio was recently reported at 0.63. This shows that without relying on selling off their tires, The Goodyear Tire & Rubber Company has only $0.63 of highly liquid assets to cover every dollar of short-term debt. That's a low number, but it's an improvement over the 0.55 reported at the end of 2023.

The trend in working capital (Current Assets minus Current Liabilities) reflects this tight management. The Goodyear Tire & Rubber Company's working capital is approximately $295 million. This is positive, but management has noted that cash has been used for working capital and restructuring costs, which is a drag on short-term cash flow. The goal is to optimize this, not hoard cash, but it does mean less operational flexibility right now.

Looking at the Cash Flow Statement for 2025, the picture is complex, but it maps to clear actions under the 'Goodyear Forward' plan. The big story is in the investing and financing sections:

• Operating Cash Flow (OCF): This has been impacted by transaction fees and working capital use, leading to negative free cash flow (FCF) of -$181 million in Q3 2025. The company expects to amortize $370 million of asset sale proceeds into OCF over time, which will help.
• Investing Cash Flow (ICF): This is strongly positive, reflecting the divestitures of non-core assets like the Chemical business, the Off-the-Road (OTR) tire business, and the Dunlop brand. These sales are expected to generate total proceeds of approximately $2.2 billion, with about $1.9 billion reflected in investing cash flow.
• Financing Cash Flow (FCF): The proceeds from asset sales are being immediately directed to debt reduction, which is a massive strength. Net debt declined by about $1.5 billion in Q3 2025 alone. This is the most critical action for long-term solvency.

The primary strength is the intentional deleveraging, using asset sales to pay down debt, which moves them toward a more stable financial foundation. The main concern, however, is the negative free cash flow, which indicates that core operations are not yet generating enough cash to cover capital expenditures and dividends, forcing them to rely on asset sales for now. This is a crucial point for investors to monitor, and you can read more about it in Breaking Down The Goodyear Tire & Rubber Company (GT) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at The Goodyear Tire & Rubber Company (GT) and asking the core question: is the market pricing this correctly? As a seasoned analyst, I see a classic deep-value setup here, but one that comes with significant near-term risk. The short answer is that, based on key metrics for the 2025 fiscal year, the stock appears undervalued relative to its historical averages and analyst targets, but this discount reflects real operational and debt concerns.

Here's the quick math on why value investors are circling. The core valuation multiples-Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA)-all point toward a cheap stock. Specifically, the forward P/E ratio is sitting around 6.60, which is defintely low compared to the broader market, suggesting earnings are cheap to buy. The Price-to-Book (P/B) ratio, which compares the stock price to the company's net asset value, is even more compelling at just 0.73 as of November 2025, meaning you are buying the company for less than its book value.

The Enterprise Value-to-EBITDA (EV/EBITDA) multiple gives us a clearer picture by factoring in the company's substantial debt load. As of November 2025, The Goodyear Tire & Rubber Company (GT)'s TTM (Trailing Twelve Months) EV/EBITDA is around 4.38, which is well below the industry median and indicates the company's operating cash flow (before interest, taxes, depreciation, and amortization) is cheap relative to its total value. This is a strong sign of undervaluation, but also a flashing light on the high debt that makes the EV/EBITDA look so low.

The stock's performance over the last year tells a story of market skepticism. The 52-week trading range for The Goodyear Tire & Rubber Company (GT) has been wide, fluctuating between a low of $6.51 and a high of $12.03. As of late November 2025, the stock is trading near $7.64, reflecting a year-to-date decline of about -7.43%. The market is clearly punishing the stock, largely ignoring the low valuation multiples in favor of focusing on macro-headwinds and the company's debt structure. For a deeper dive into who is buying and why, you should check out Exploring The Goodyear Tire & Rubber Company (GT) Investor Profile: Who's Buying and Why?

For income-focused investors, a crucial point is that The Goodyear Tire & Rubber Company (GT) does not offer a dividend. The TTM dividend payout as of November 2025 is $0.00, resulting in a 0.00% dividend yield, as the company has prioritized capital preservation and debt management since the last payout in early 2020.

Wall Street's consensus reflects this push-pull between cheap valuation and operational risk. The overall analyst consensus is a Hold rating. This isn't a ringing endorsement, but the average 12-month price target across a group of analysts is approximately $11.36. This target suggests a potential upside of over 48% from the current price, which is a clear indication that analysts believe the stock is significantly mispriced to the downside right now. Their caution is simply a hedge against execution risk.

• Analyst Consensus: Hold
• Average 12-Month Target: $11.36

Here is a summary of the key valuation metrics for the 2025 fiscal year:

The action here is clear: The Goodyear Tire & Rubber Company (GT) is a deep-value play. The numbers scream undervalued, but the market's Hold consensus and the stock's price trend tell you the risk is real. You need to weigh that implied 48% upside against the company's ability to navigate its debt and execute its transformation plan.

Risk Factors

The Goodyear Tire & Rubber Company (GT) faces a complex mix of financial and operational risks right now. The direct takeaway is this: while the company's aggressive restructuring is yielding cost savings, it is still wrestling with elevated debt and significant volume contraction, which led to massive non-cash charges in the third quarter of 2025. You need to look past the transformation headlines and focus on the core financial health.

Financial Leverage and Non-Cash Charges

Honestly, the biggest near-term risk is the balance sheet. Despite the successful execution of asset sales, the company's leverage remains a serious concern. In the first quarter of fiscal year 2025, for instance, GT's debt servicing costs actually surpassed its adjusted operating profit, which is a clear red flag for financial risk.

The third quarter of 2025 highlighted this pressure when the company reported a net loss of a staggering $2.2 billion. This loss was primarily driven by two non-cash, non-recurring items: a $1.4 billion deferred tax asset valuation allowance and a $674 million goodwill impairment charge. This impairment, in particular, intensifies the existing risk from structural challenges and weak demand in the commercial tire segment.

Here's the quick math on the debt reduction efforts:

• Total gross proceeds from asset sales (OTR, Dunlop, Chemical business) reached approximately $2.2 billion.
• Long-term debt stood at $7.302 billion in Q1 2025.
• Total debt is expected to decrease to approximately $6.67 billion after the final asset sale is completed.

Operational Headwinds and External Competition

Operationally, The Goodyear Tire & Rubber Company is navigating a challenging industry landscape marked by both cost inflation and market competition. Raw material inflation is a persistent external risk, projected to increase costs by $350 million in the first half of 2025 alone. Plus, the flood of low-end imports continues to impact pricing and volumes, especially in the Americas.

This external pressure is directly reflected in volume. In Q3 2025, tire unit volume decreased by 5.9% to 40.0 million units year-over-year. You can't ignore a volume drop like that. Another key risk is the commercial tire market, which is seeing weak demand due to extended truck life cycles and low pre-buy activity.

Mitigation and Strategic Actions

The company's primary mitigation strategy is the 'Goodyear Forward' transformation program. This is a crucial self-help effort, and it's defintely delivering. The plan focuses on streamlining operations, divesting non-core assets, and shifting the product mix toward higher-margin tires, like new all-terrain and electric vehicle (EV) products.

The transformation is designed to offset the volume and inflation headwinds. Management forecasts a total of $750 million in 'Goodyear Forward' benefits for the full year 2025. The first nine months of 2025 already delivered $580 million in benefits, which is a strong sign of execution. The company is absolutely laser focused on controlling the controllables.

This table summarizes the core operational risks and the company's direct response:

To understand the long-term vision driving these strategic shifts, you should review the Mission Statement, Vision, & Core Values of The Goodyear Tire & Rubber Company (GT).

Growth Opportunities

You're looking for a clear path through the tire industry's uneven road, and for The Goodyear Tire & Rubber Company (GT), that path is the strategic pivot to premium products and operational efficiency. The company's future growth is defintely anchored in the Goodyear Forward transformation plan, which is laser-focused on optimizing the portfolio and slashing costs to boost margins.

This initiative is not just talk; it's driving real, measurable financial impact. Management forecasts the plan will deliver $750 million in benefits to segment operating income for the 2025 fiscal year, aiming to double the Segment Operating Income (SOI) margin to 10% by year-end. This is a crucial shift from relying on sheer volume to prioritizing high-margin sales.

The Premium Product and Efficiency Engine

The core growth driver is a decisive shift toward premium, high-performance tires, especially in the larger, more profitable 18-inch-plus segments. This is backed by strategic divestitures-selling non-core assets like the Off-the-Road (OTR) tire business, the Dunlop brand, and a majority stake in Goodyear Chemicals-which generated nearly $1.4 billion in cash in 2025. This cash is being used to reduce debt and fund core initiatives.

Product innovation is also centered here. In 2025, The Goodyear Tire & Rubber Company (GT) is introducing five new product lines in the U.S., including the Goodyear Assurance MaxLife 2, which boasts an 85,000-mile limited tread life warranty. They are also investing $10 million in modernizing the Oklahoma facility to add 10 million units of premium tire capacity by 2026.

• Focus on ultra-high-performance and all-weather segments.
• Divestitures raised nearly $1.4 billion in 2025 for debt reduction.
• New product launches target high-margin consumer demand.

Financial Projections and Analyst Consensus

The market outlook for The Goodyear Tire & Rubber Company (GT) in 2025 is mixed, reflecting the turbulence of the transformation against a backdrop of raw material headwinds. The company reported a Q1 2025 net income of $115 million on net sales of $4.3 billion, demonstrating early progress. However, annual revenue growth is projected to be modest, with a forecast annual revenue growth rate of around 1.66%.

Here's the quick math: analysts project the company's annual revenue for 2025 to be approximately $18.31 billion. The real upside is in profitability, where analysts forecast a significant earnings per share (EPS) increase next year, from $1.50 to $2.16 per share, representing a 44.00% increase. This suggests the cost-cutting and premium focus is taking hold even if the top line is flat.

Competitive Edge and Strategic Partnerships

The Goodyear Tire & Rubber Company (GT) maintains a strong competitive advantage through its established brand recognition and its multi-brand portfolio, which includes Cooper, Mickey Thompson, and Kelly, allowing it to cover diverse market segments from economy to ultra-high-performance. The long-term advantage lies in technology and innovation, particularly in the realm of intelligent tires (tyres).

The Goodyear SightLine global tire intelligence platform, for example, is a major differentiator. This system uses sensors to provide real-time data on tire wear, load, and road conditions, moving the business beyond selling rubber to selling data-driven mobility solutions. Plus, the company is actively collaborating with new mobility companies like Gatik and investing in startups through Goodyear Ventures to stay ahead of the electric vehicle (EV) and autonomous driving trends. You can dive deeper into who is betting on this strategy by Exploring The Goodyear Tire & Rubber Company (GT) Investor Profile: Who's Buying and Why?

Next Step: Portfolio Managers should model the impact of the $750 million in Goodyear Forward benefits on the 2025 net income by end of next week.