On Mar 7, we downgraded cast aluminum road wheels manufacturer
) to Underperform, based on the company's significant customer
concentration risk from the Detroit Big Three and
lower-than-expected fourth quarter 2012 earnings.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
OSHKOSH CORP (OSK): Free Stock Analysis
SUPERIOR INDS (SUP): Free Stock Analysis
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Why the Downgrade?
Superior Industries' profits declined to $2.7 million or 10 cents
per share in the fourth quarter of 2012 from $12.0 million or 44
cents in the same quarter of 2011. Earnings per share were
substantially lower than the Zacks Consensus Estimate of 26 cents
Revenues in the quarter fell 3% to $210.0 million due to flat
sales volume and a reduction in average selling price due to
lower aluminum prices.
Following the release of the fourth quarter results, the Zacks
Consensus Estimate for 2013 decreased 17.5% to 85 cents per
share. The Zacks Consensus Estimate for 2014 remained flat at 95
cents per share. Currently, Superior Industries retains a Zacks
Rank #5 (Strong Sell).
Superior Industries remains under pressure due to customer
concentration. The Big Three customers of the company --
Ford Motor Co.
General Motors Company
) and Chrysler -- constitute 75% of its total wheel sales. Any
fluctuation in demand from them will adversely affect the
The company faces increased competition in terms of price,
technology, product quality, delivery and overall customer
service. In addition, the automotive component supply industry is
highly competitive in nature. Superior faces competition from the
well established companies as well as from the newly formed
companies in low-cost foreign markets of China.
Other Stocks to Consider
), a Zacks Rank #1 (Strong Buy) stock, is performing well in the
industry where Superior Industries operates.