Cooper Tire

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Cooper Tire Rubber Company

• Emma Gonzalez
• Jose Gauna
• Cathy Flores
• Veronica Flores
• Kim Huynh
• Fune Hoang

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And our missing member
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What Is Cooper Tires?

• A global company specializing in the design,
  manufacture and sales of passenger car, light
  truck, medium truck, motorcycle and racing tires,
  as well as tread rubber and related equipment for
  the retread industry
• Headquartered in Findlay, Ohio
• 39 manufacturing, sales, distribution, technical
  and design facilities around the world

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The Mission Statement

• The purpose of the Cooper Tire Rubber Company
  is to earn money for its shareholders and
  increase the value of their investment. We will
  do that through growing the company, controlling
  assets and properly structuring the balance
  sheet, thereby increasing EPS, cash flow, and
  return on invested capital.

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History

• Coopers history dates back to 1914, John F.
  Schaefer and Claude E. Hart, brothers-in-law,
  purchased the M and M Manufacturing Company in
  Akron, Ohio, producing tire patches, tire cement
  and tire repair kits.
• A year later, they acquired The Giant Tire
  Rubber Company of Akron, a tire rebuilding
  business.

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History

• And in 1920, Ira J. Cooper formed the Cooper
  Corporation for the production of new tires. He
  distributed Cooper brand tires through his
  wholesale business. The two companies, Cooper and
  Giant, operate in two separate plants in Findlay.
  
• It was not until 1946 that the companys name
  changed to what it is today Cooper Tire and
  Rubber Company.

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Products
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Motorcycle Tires
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Commercial Tires
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SUV Tires
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Passenger Tires
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Ultra-High Performance Tires
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Major Competitors

• Nashville, TN
• 38 Production facilities
• Tires, rubber products, and building industrial
  products

• Operations in 28 countries
• Worlds largest
• Tires, rubber products, rubber-related chemicals

• Operations in more than 170 countries
• Tires, maps, guides

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Market Capitalization

• Cooper Tires ranks 4th
• Major competitor Goodyear
• Cooper Tires market capitalization is 1.406
  billion

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TTM Sales

• Cooper Tire ranks 3rd
• Only has 6 of market share
• Major competitor is Bandag Inc.

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Board of Directors

• Thomas A. Dattilo
• Became employed by the Company as President and
  Chief Operating Officer and was named a director
  in January 1999
• Effective April 28, 2000, he was elected Chairman
  of the Board, President and Chief Executive
  Officer

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Board of Directors

• Harold C. Miller
• Joined Cooper in March 2002 as Vice President of
  corporate planning and control
• D. Richard Stephens
• Vice President of Technical and Commercial Tire
  Operations

• Philip G. Weaver
• Vice President and Chief Financial Officer since
  1999
• Eileen B. White
• Corporate Controller since 1997

They own less than 1 of stock ownership.
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Financial RatiosGrowth Rates
Rating Fair
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Financial RatiosPrice Ratios
Rating Unsatisfactory
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Financial RatiosProfit Margin
Rating Satisfactory
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Financial RatiosFinancial Condition
Rating Good
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Financial RatiosInvestment Returns
Rating Good
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Financial RatiosManagement Efficiency
Rating Unsatisfactory
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Holding Period Return
Holding Period Return helps the investor to
predict the return on the investment in a
particular share. Cooper Tires HPR decreased
dramatically from 2003 to 2004 but is expected to
have a dramatic increase from 2004 to 2005.
Cooper Tires pays dividends of 0.42 for 2003 and
2004 and expects to pay the same amount in 2005.
The current share price is 21.50.
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Free Cash Flow
Free Cash Flow fluctuates throughout the year
because it is negative in 2003. This dramatic
negative change was mainly because of a low net
income in 2003 and high change in working
capital.
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Cost of Equity
Cooper Tires Free Cash Flow is not realistic
because it assumes the Ke and growth rate to be
constant, and it is not. The negative free cash
flow in 2003 is a result of low net income and
high change in working capital.
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Risk Analysis
The beta for CTB has fallen in 2002 but has
remained stable for the past 3 years. The beta
in 2004 was the highest 1.1688 because Cooper
sold its automotive unit. Like Beta, Unlevered
Beta was also the highest in 2004. The beta for
Cooper for the past 2 years is higher than 1,
which means that the company has high risk. This
is a weakness for Cooper because it gives
investors a higher rate of return.
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Risk Analysis
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Cost of Capital
Cooper Tires debt ratio is high and slowly
decreasing from 65 in 2002 to 56 in 2004. These
ratios should conclude that the higher the debt,
the higher the beta, which must result in higher
Ke
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Market Efficiency
Non-Company News
Bad News Alan Greenspan presents his testimony
on monetary policy before Congress about increase
in interest rates.
Weak Form
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Market Efficiency
Company News
Bad News - Cooper Tires Rubber Company has
signed a deal to sell it automotive business for
about 1.165 billion.
Weak Form
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Capital Structure
Compare to Industrys 43 Equity and 57 Debt
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Cost of Capital

The debt to total assets ratio decrease from 2002
to 2004 because of the decreasing debt throughout
the years. Coopers capital structure does not
seem to follow any of the 3 MM models.
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To Recap

• Strengths
• Stability
• Financial Condition
• Capital Structure

• Weaknesses
• Management Efficiency
• Profit Margins
• Price Ratios

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To Buy, Sell, or Hold?
Most real analysts say to SELL, however Jose
wants to hold his share.
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To Buy, Sell, Hold?