The Goodyear Tire & Rubber Company (NASDAQ:GT), might not be a large cap stock, but it saw a significant share price rise of 41% in the past couple of months on the NASDAQGS. The recent share price gains has brought the company back closer to its yearly peak. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Goodyear Tire & Rubber’s outlook and value based on the most recent financial data to see if the opportunity still exists.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

What's The Opportunity In Goodyear Tire & Rubber?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Goodyear Tire & Rubber’s ratio of 14.1x is trading slightly below its industry peers’ ratio of 14.53x, which means if you buy Goodyear Tire & Rubber today, you’d be paying a reasonable price for it. And if you believe that Goodyear Tire & Rubber should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Although, there may be an opportunity to buy in the future. This is because Goodyear Tire & Rubber’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

View our latest analysis for Goodyear Tire & Rubber

What does the future of Goodyear Tire & Rubber look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Goodyear Tire & Rubber. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? GT’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at GT? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?