Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Tires & Rubber Products industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Tires & Rubber Products Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Tires & Rubber Products Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Tires & Rubber Products industry for Wednesday, March 01, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Tires & Rubber Products industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Amerityre Corp’s Value Grade

Value Grade:

Amerityre Corporation engages in the development, manufacture, and sale of solid polyurethane tires. The Company’s polyurethane material technology is based on two formulations: closed-cell polyurethane foam, a lightweight material with high load-bearing capabilities for low duty cycle applications, and Elastothane, a high-performance polyurethane elastomer with high load-bearing capabilities for high duty applications. It is focused on two segments of the tire market: closed-cell polyurethane foam tires and polyurethane elastomer industrial tires. The Company manufactures polyurethane foam tires for bicycles, golf and baggage carts, hand trucks, lawn and garden equipment, wheelbarrows, personnel carriers, and medical mobility products. It has developed solid polyurethane industrial tires made of Elastothane, its family of polyurethane elastomer formulations. It offers over 20 sizes for Class 1, 4 and 5 forklifts, as well as elastomer tires for scissor lifts.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Amerityre Corp has a Value Score of 82, which is considered to be undervalued.

When you look at Amerityre Corp’s price-to-sales ratio at 0.46 compared to the industry median at 0.31, this company has a higher price relative to revenue compared to its peers. This could make Amerityre Corp’s stock less attractive for value investors.

Amerityre Corp’s price-earnings ratio is 6.90 compared to the industry median at 11.83. This means it has a lower share price relative to earnings compared to its peers. This could make Amerityre Corp more attractive for value investors.

Now, let’s assess Amerityre Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 3.9, when compared to the industry median of 4.9, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Amerityre Corp’s shareholder yield is lower than its industry median ratio of (0.84%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Amerityre Corp’s price-to-book ratio is higher than its industry median ratio of 1.20. This could make Amerityre Corp less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Amerityre Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Amerityre Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 64.60. This could make Amerityre Corp more attractive because the lower P/FCF ratio indicates that Amerityre Corp is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Bridgestone Corp (ADR)’s Value Grade

Value Grade:

BRIDGESTONE CORPORATION is a Japan-based company principally engaged in the tire business. The Company operates its business through two business segments. Tire segment is involved in the provision of tire tubes for passenger cars, trucks, buses, construction and mining vehicles, industrial vehicles, agricultural machinery, aircraft and motorcycles. The Segment also provides tire related products, retread materials and related technologies, automobile maintenance and repair services, as well as tire raw materials. Diversification segment provides chemical products, such as automobile related parts, urethane foam and related goods, electronic precision parts, industrial materials related goods and building materials related products, roofing materials, as well as sports goods, such as golf balls and golf clubs. The Segment also provides bicycles and bicycle-related products and conducts finance business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bridgestone Corp (ADR) has a Value Score of 68, which is considered to be undervalued.

Bridgestone Corp (ADR)’s price-earnings ratio is 11.8 compared to the industry median at 11.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Bridgestone Corp (ADR) fairly attractive for value investors.

Bridgestone Corp (ADR)’s price-to-book ratio is lower than its peers. This could make Bridgestone Corp (ADR) fairly attractive for value investors when compared to the industry median at 1.20.

You can read more about Bridgestone Corp (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Goodyear Tire & Rubber Co’s Value Grade

Value Grade:

The Goodyear Tire & Rubber Company is engaged in developing, manufacturing, marketing and distributing tires for various applications. The Company also manufactures and markets rubber-related chemicals. It is also an operator of commercial truck service and tire retreading centers. It operates approximately 950 retail outlets where it offers its products for sale to consumer and commercial customers and provides repair and other services. The Company's segments represent its regional tire businesses: Americas; Europe, Middle East and Africa (EMEA), and Asia Pacific. It manufactures and markets various lines of rubber tires for automobiles, trucks, buses, aircraft, motorcycles, earthmoving and mining equipment, farm implements, industrial equipment, and various other applications. Its brands include Goodyear, Cooper, Dunlop, Kelly, Debica, Sava, Fulda, Mastercraft and Roadmaster. It manufactures products in approximately 57 manufacturing facilities in over 23 countries worldwide.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Goodyear Tire & Rubber Co has a Value Score of 85, which is considered to be undervalued.

Goodyear Tire & Rubber Co’s price-earnings ratio is 16.2 compared to the industry median at 11.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Goodyear Tire & Rubber Co less attractive for value investors.

Goodyear Tire & Rubber Co’s price-to-book ratio is higher than its peers. This could make Goodyear Tire & Rubber Co less attractive for value investors when compared to the industry median at 1.20.

You can read more about Goodyear Tire & Rubber Co’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Tires & Rubber Products Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Tires & Rubber Products stocks as well as other industrys.

Choosing Which of the 3 Best Tires & Rubber Products Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Amerityre Corp stock has a Value Grade of A.
• Bridgestone Corp (ADR) stock has a Value Grade of B.
• Goodyear Tire & Rubber Co stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Tires & Rubber Products industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Tires & Rubber Products Stocks

Want to learn more about Tires & Rubber Products stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Tires & Rubber Products Stocks for Wednesday, March 01
• Why Goodyear Tire & Rubber Co’s (GT) Stock Is Down 5.59%
• 3 Undervalued Tires & Rubber Products Stocks for Monday, January 30
• Is Vystar Corp (VYST) Stock a Good Investment?

AAII Disclaimer

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