At the market close on May 28, the S&P 500 remains statistically flat for the year. So it may not be saying much to point out that Goodyear Tire & Rubber Co. (NASDAQ: GT) is burning up the market in 2025. GT stock is up 28%, buoyed by a 22% increase in the last three months.
Undeniably, there are more attractive choices among automotive stocks. Goodyear took on a significant pile of debt with its acquisition of Cooper Tire in 2021. That’s stressed operating margins and earnings. It's also a big reason why GT stock is still down more than 5% in the last 12 months despite the strong rally in 2025.
But this is no ordinary market. If investors are looking for opportunities, particularly if they have a contrarian mindset, GT stock may offer a compelling short-term opportunity.
JPMorgan Just Issued a Bullish Price Target
Goodyear delivered its first quarter 2025 earnings on May 7. The results were mixed. Negative earnings per share of four cents were better than the negative six cents forecast. However, revenue of $4.25 billion missed expectations for $4.51 billion. Both numbers were lower year-over-year (YoY).
That’s why it’s significant to note that two weeks after the earnings report, JPMorgan Chase & Co. (NYSE: JPM) reiterated its Overweight rating on GT stock with a $17 price target. That was lower than its prior target of $18, but it’s still 46% above the stock’s closing price on May 28. It's also 21% higher than the consensus price target of $14.
The reason for the upgrade is confidence in the company’s restructuring plan.
Analyst Ryan Brinkman believes that Goodyear’s “Going Forward” plan, which kicked off in 2023, is ahead of schedule. The plan's goals call for $1.5 billion in savings, margin growth, and debt reduction.
One way Goodyear is accomplishing those goals is by divesting itself of assets. So far in 2025, the company has sold off two major assets, which have helped the company raise nearly $1.4 billion in cash. In January, Goodyear announced it was divesting its assets in Dunlop. Then, in May, it announced the sale of a majority stake in Goodyear Chemicals to Gemspring Capital Management.
The Company is Shielded from Tariff Troubles
[content-module:Forecast|NASDAQ: GT]Goodyear’s debt-to-equity ratio is down to 1.30. That puts it at a discount to its historical averages. However, cost-cutting will only get the company so far. A key reason for investor optimism is that Goodyear is insulated from tariffs.
The iconic tire company has a strong manufacturing base in the United States. In its earnings report, Goodyear said that only 12% of its U.S. tire supply (accounting for 60% of its revenue) comes from non-USMCA countries. The sector average is 50%, putting Goodyear at a competitive advantage.
This is a case where investors can put on their consumer hats. Vehicle owners know that in addition to death and taxes, tires are one of the most predictable expenses. They also know that tires don’t come cheap.
Goodyear won’t necessarily come cheap, but without the burden of tariffs, it should have pricing power that could be accretive to market share. That’s music to the ears of the current administration, which is pushing for a more protectionist approach to manufacturing, and it could give GT stock more room to run.
At This Point, GT Stock is All About Growth
Owning GT stock in 2025 is about stock price growth. Like many companies, Goodyear suspended its dividend in 2020. However, because of the company’s current debt woes brought about by its acquisition of Cooper Tire in 2021, it hasn’t reinstated that dividend.
Goodyear is a contrarian play to be sure, but for investors looking to find an undervalued stock that may surprise to the upside, it may be a good year to own Goodyear stock.
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