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Superior Industries (SUP) Down 18.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Superior Industries (SUP - Free Report) . Shares have lost about 18.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Superior Industries Reports Narrow Q3 Loss, Tweaks View

Superior Industries incurred adjusted third-quarter 2019 loss of 8 cents, narrower than the Zacks Consensus Estimate of 19 cents. The lower-than-expected loss can be attributed to higher-than-expected shipments and revenues in European markets. The loss per share also narrowed year over year by 175%.

The aluminum-wheel manufacturer reported revenues of $352 million, beating the Zacks Consensus Estimate of $336 million. However, the top line was higher than the year-ago figure of $347.6 million.

Quarter Details

During the third quarter, the company’s wheel unit shipments increased 2% year over year to 4.9 million. Higher shipments in Europe, were partly offset by lower volumes in North America amid a 40-day long strike between UAW and General Motors. Shipments in Europe came in at 2.3 million, increasing from 2 million recorded in the third quarter of 2018. The figure also outpaced the Zacks Consensus Estimate of 2.2 million.

Sales in the European market came in at $164 million, higher than $149.8 million recorded in the year-ago quarter, and topped the Zacks Consensus Estimate $160 million. The increase was driven by improved product mix and higher volumes, partially offset by weaker euro. Sales in the North American market totaled $188 million, down from $197.8 million in the third quarter of 2018.

The company’s operating profit declined from $7.7 million to $0.2 million in the quarter under review amid restructuring costs of $13 million related to the Fayetteville facility. Selling, general and administrative expenses inched up to $16.3 million from $16 million in the year-ago quarter.

Net cash provided by operating activities totaled $32.7 million in the third quarter, down from $33.5 million in the year-ago quarter.  Capital expenditure amounted to $18.9 million.

During the quarter, Superior Industries suspended its quarterly dividend in a bid to reduce net debt and reinvest in business. As of Sep 30, the company’s net debt was $709 million, representing debt-to-capital ratio of 68.4%.

2019 Outlook Revised

Superior Industries projects unit shipments in the band of 19.5-19.7 million compared with the prior guidance of 19.5-19.9 million. Net sales is projected to lie between $1.39 million and $1.42 million compared with the prior range of $1.39-$1.44 billion. Cash flow from operations is projected at $135-$155 million, up from the previous guided range of $125-$145 million. Capex forecast is kept intact at $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 -785.71% 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 a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 these revisions 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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