Goodrich, an `Old Economy' Play, Is Praised for Buyback, Innovation
Let's get one thing straight: B.F. Goodrich doesn't make tires.</br></br>In fact, it hasn't made tires since 1986, when it sold that business to France's Groupe Michelin in order to focus on more-lucrative operations: aerospace parts, engineered products and chemicals. Last July, still trying to distinguish itself from the tire industry, the company moved its headquarters from Richfield, Ohio, near Akron, the "rubber capital of the world," to Charlotte, N.C., home of Coltec Industries, an aircraft-parts maker that Goodrich bought last year for $1.6 billion in stock and cash.</br></br>The company is so fed up with its case of mistaken identity that it even considered changing its name to "Inrich" (combining innovation and Goodrich) before scrapping that idea. Now, it is seeking a moniker that still includes "Goodrich."</br></br>Despite lingering confusion over its business lines, investors are warming to the company, whose stock-market value totals $3.3 billion. From a 52-week low of $21 in mid-December, the shares have risen to around $30. But Goodrich is still an "old economy" bargain, bullish analysts say. They envision a gain of 40% or more in the next 12 months, to as much as $43.</br></br>"There's a lot of value in B.F. Goodrich," says Mark Parker, chief executive of Joseph Parker & Co., a Thomasville, Ga., money manager that owns nearly 72,000 shares. "Their earnings and sales keep growing, and nobody seems to care." The stock trades at about 10 times analysts' average 2000 earnings estimate of $3.16 a share. The Standard & Poor's 500 Index carries a higher P/E of 25.