Superior Industries (SUP) Down 47.5% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Superior Industries (SUP). Shares have lost about 47.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Superior Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Superior Industries Reports Q4 Loss Narrower Than Expected

Superior Industries reported adjusted fourth-quarter 2019 loss of 8 cents, narrower than the Zacks Consensus Estimate of a loss of 35 cents. The narrower-than-expected loss resulted from higher-than-expected shipments and revenues in European markets. The loss per share also narrowed 50%, year on year.

The aluminum-wheel manufacturer reported revenues of $310 million, missing the Zacks Consensus Estimate of $332 million. The top line also came in lower than the year-ago figure of $379 million. This downside resulted mainly from lower volumes, including the impact of the General Motors (GM) strike as well as lower aluminum price.

Quarter Details

During the fourth quarter, the company’s wheel unit shipments decreased 14% year over year to 4.5 million. This downside primarily stemmed from shipment declines in North America and Europe due to lower year-over-year production, including the impact of the UAW labor strike at GM. Shipments in Europe came in at 2.3 million, down from the 2.5 million recorded in fourth-quarter 2018. In North America, the shipments were 2.18 million, lower than the year-ago figure of 2.64 million.

Sales in the European market came in at $159.6 million, lower than the $185.1 million recorded in the year-ago quarter. Sales in the North American market totaled $150.7 million, down from the prior-year period’s $193.7 million.

The company reported operating loss of $92 million as against operating profit of $19 million in the year-ago quarter. Selling, general and administrative expenses in the quarter were $17 million, flat year over year.

Net cash provided by operating activities summed $61 million in the December-end quarter, down from the year-ago quarter’s $92 million. Capital expenditure amounted to $16.7 million.

During the quarter, Superior Industries paid dividends of $3 million and purchased $3 million of shares from minority equity holders of Superior Industries Europe AG. As of Dec 31, 2019, the company’s net debt was $553 million, representing debt-to-capital ratio of 68.72%.

2020 Outlook

For full-year 2020, Superior Industries projects unit shipments of 18.4-19 million. Net sales are projected between $1.33 million and $1.39 million, and cash flow from operations is projected at $125-$145 million. Adjusted EBITDA is expected in the range of $170-$190 million and capex is expected to be around $75 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -128.57% due to these changes.

VGM Scores

At this time, Superior Industries has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Superior Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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