Goodyear Tire & Rubber Co reported a higher-than-expected quarterly profit as raw material costs fell in North America and the tire maker said it would buy back shares worth up to $150 million in the fourth quarter.
Shares of the company, which sells tires under brands such as Dunlop, Sava and Fulda, rose as much as 10 percent.
Continue Reading Below
Operating income from Goodyear's North America business, which accounts for 44 percent of its total revenue, rose 30 percent in the third quarter. Margins in the business rose to 10.2 percent from 7.4 percent, a year earlier.
"We expect a very sharp positive reaction to this set of significantly better results, particularly given what we see as low investor expectations," J.P. Morgan analyst Ryan Brinkman wrote in a note.
Goodyear also said it now expected its 2014 operating income growth to be closer to the higher end of its previous forecast of 10-15 percent.
However, net income available to the company's shareholders fell to $161 million, or 58 cents per share, in the quarter ended Sept. 30 from $166 million, or 62 cents per share, a year earlier.
Excluding items, Goodyear earned 87 cents per share.
Revenue fell 6.8 percent to $4.66 billion.
Analysts on average had expected earnings of 70 cents per share and revenue of $4.93 billion, according to Thomson Reuters I/B/E/S.
Goodyear's shares were up 6.3 percent at $23.25 in morning trading on the Nasdaq.
Up to Tuesday's close, the stock had risen about 6 percent in the past 12 months, while the Dow Jones U.S. auto parts index fell about 1 percent. (Reporting by Abinaya Vijayaraghavan in Bangalore; Writing by Sweta Singh; Editing by Tresa Sherin Morera and Kirti Pandey)