On May 17, we upgraded
Superior Industries Inc.
) to Neutral based on its strong product portfolio and improving
revenues in the first quarter of 2013. However, we are concerned
about the company's significant customer concentration risk from
the Detroit Big Three.
Why the Upgrade?
On May 3, Superior Industries posted earnings per share of 18
cents in the first quarter of 2013 in line with the Zacks
Consensus Estimate. However, it declined 28% year over year from
25 cents in the first quarter of 2012.
Revenues in the quarter rose 1.97% to $206.4 million, beating the
Zacks Consensus Estimate of $199.0 million. The year-over-year
improvement was driven by stronger sales mix. Unit shipments
remained flat at 3.1 million units compared with the year-ago
Following the release of the first-quarter results, the Zacks
Consensus Estimate for 2013 decreased 6.8% to 69 cents per share.
The Zacks Consensus Estimate for 2014 declined 8.9% to 72 cents
Superior Industries will benefit from the strong product
portfolio, which is expected to match with the current market
trends. The company is the largest manufacturer of aluminum
wheels, which are widely accepted due to their lighter weight.
Presently, aluminum wheels constitute about 65% of the total
number of vehicles, and are expected to increase by 1% every
Superior Industries has no bank or other interest bearing debt on
its balance sheet at the end of first-quarter 2013. The absence
of any long-term debt will allow the company to fully utilize the
cash for investing in potential opportunities. As of Mar 31,
2013, Superior Industries had a working capital of $345.3 million
compared with $338.3 million as of Dec 30, 2012.
However, 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 will adversely affect the company.
Other Stocks to Consider
Tower International, Inc.
), a Zacks Rank #1 (Strong Buy) stock, is performing well in the
industry where Superior Industries operates.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
SUPERIOR INDS (SUP): Free Stock Analysis
TOWER INTL INC (TOWR): Free Stock Analysis
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