Bridgestone Corporation (BRDCY) manufactures and distributes tires and rubber products through its subsidiaries. It operates in two segments: Tires and Diversified Products.
In addition, the firm provides maintenance, information technology/sensing technology, and other solutions for the mining, fleet, and agricultural industries. It operates in Japan, the United States, China, Asia Pacific, Europe, Russia, the Middle East, Africa, and Oceania.
The company’s shares have gained 12.9% over the past month and 7.6% over the past three months to close its last trading session at $19.88.
The company’s continued partnerships should help it better serve its customers. In its "Mid Term Business Plan for the years 2021 to 2023," the company mentioned its aim to achieve a 40% gross profit ratio in 2023. It also aims to take its revenue to the 3,300 billion JPY level.
Here's what could shape BRDCY's performance in the near term:
Robust Financials
BRDCY's revenue increased 22.5% year-over-year to ¥891.01 billion ($6.77 million) for the first quarter ended March 31, 2022. Its operating profit grew 5.1% from the year-ago value to ¥87.63 billion ($665.76 million). The company’s net income came in at ¥54.89 billion ($417.04 million). Its EPS amounted to ¥76.51.
Discounted Valuation
In terms of forward Price/Cash Flow, the stock is currently trading at 6.39x, 34.4% lower than the industry average of 9.74x. Also, its forward EV/Sales of 1.09x is 4.3% lower than the industry average of 1.14x. Moreover, BRDCY's forward Price/Book of 1.22x is 42.3% lower than the industry average of 2.11x.
POWR Ratings Reflect Solid Prospects
BRDCY’s strong fundamentals are reflected in its POWR Ratings. The stock's overall B rating translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. BRDCY has an A grade for Stability. The stock’s beta of 0.52 is in sync with the Stability grade.
Of the 69 stocks in the B-rated Auto Parts industry, BRDCY is ranked #8.
Beyond what I stated above, we have graded BRDCY for Sentiment, Value, Quality, Growth, and Momentum. Get all BRDCY ratings here.
Bottom Line
With the growing car market and increased investment in auto maintenance, BRDCY has benefited significantly from the rising demand since the beginning of the year.
Furthermore, the company's strong financials and high profitability should keep investors interested in the stock, allowing it to continue soaring in the coming months.
How Does Bridgestone Corporation (BRDCY) Stack Up Against its Peers?
BRDCY has an overall POWR Rating of B, which equates to a Buy rating. Check out these other stocks within the same industry with A (Strong Buy) ratings: Ituran Location & Control Ltd. (ITRN), Genuine Parts Co. (GPC), and Garrett Motion Inc. (GTX).
BRDCY shares were trading at $19.79 per share on Wednesday afternoon, down $0.09 (-0.45%). Year-to-date, BRDCY has declined -7.74%, versus a -12.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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