The Goodyear Tire & Rubber Company (GT), a vehicle tire manufacturer, blamed inflation in its overseas operations for misstating financials two consecutive years.

Though it is common knowledge inflation has been rampant in Turkey for years, Goodyear was not apparently paying close enough attention to accurately report its results from that country.

Turkey has been designated as a highly inflationary economy since 2022.

The designation requires companies like Goodyear to remeasure gains and losses in Turkey into their reporting currency and recognize gains and losses on the income statement.

Half-way through 2025, Goodyear says it realized it had not done so accurately the previous two years.

In revising those periods, Goodyear acknowledged it:

—Inflated 2024 Net income $25 million, or 71.4%
—Understated 2023 Net loss $44 million, or 6.4%

Executives received bonuses in each of the misstatement years.

Notably, Executive bonuses at Goodyear were based, in part, on costs and expenses (2023) that were wrongly understated and misstated net income (2024 CEO Offer Letter).

No mention was made during our filing review of the Board clawing back bonus money.

Goodyear says the errors are not material.

With an Enterprise Value (EV) of approximately $10.2 billion, Goodyear is priced as if it will grow annual sales to more than $27.5 billion, up from an estimated $17.5 billion in 2026. To justify its current share price of $9.10 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Goodyear must:

—Grow sales 4.2% annually for the next decade, faster than the consensus 2026 estimate of (3.8%) and the three-year average of (4.2%)
—Increase NOPAT margin to 3.4%, versus our 2025 estimate of (9.1%) and three-year average estimate of (1.09%)
—Increase Invested Capital (IC) Turns to 2.8, up from our three-year estimate of 1.24

Notably, the current share price also implies Goodyear increases Return on Invested Capital (ROIC) to 9.52% from our 2025 estimate of (11.62%) and three-year average estimate of (1.61%):