On Aug 20, 2013, we maintained our Neutral recommendation on
Superior Industries International, Inc.
). The company has a strong product portfolio and the Mexican
operations are also yielding improved returns. However, the
company faces significant customer concentration risk, declining
operating cash flow and high competition.
On Aug 2, 2013, Superior Industries reported earnings per
share of 23 cents for the second quarter of 2013. Results were in
line with the year-ago quarter, but it outpaced the Zacks
Consensus Estimate by 6 cents. Revenues for the quarter dropped
7.5% year over year to $199 million, missing the Zacks Consensus
Estimate of $205 million.
The Zacks Consensus Estimate for Superior Industries' 2013
earnings per share increased 14.5% to 79 cents since the earnings
release. Moreover the Zacks Consensus Estimate for 2014 increased
9.7% to 79 cents in the last 30 days.
The Mexican operations of Superior Industries are witnessing
increasing operating income on the back of an improved mix of
wheel sizes and finishes. As the Mexican operations contributed
62% of the total production in the first half of 2013, improving
operating income in the region is favorable for the company.
Moreover, the absence of any long-term debt has allowed full
utilization of cash by investing in potential opportunities as
Superior Industries does not need to divert its funds for
interest payments or debt repayment.
However, Superior Industries has been witnessing a decline in
cash flows. The company's cash outflow increased to $16.8 million
as of Jun 30, 2013, from $6.4 million as of Jun 24, 2012.
Moreover, Superior Industries is significantly reliant on
Ford Motor Co.
General Motors Company
Toyota Motor Corporation
), and Chrysler for its sales. These companies represented
almost 92% of its total wheel sales in the first half of
Superior Industries currently carries a Zacks Rank #2
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
SUPERIOR INDS (SUP): Free Stock Analysis
TOYOTA MOTOR CP (TM): Free Stock Analysis
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