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Why Is Superior Industries (SUP) Down 14.8% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Superior Industries International, Inc. (SUP - Free Report) . Shares have lost about 14.8% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.

Superior Industries Earnings Miss in Q1, Fall Y/Y

Superior Industries’adjusted earnings were $0.31 per share in first-quarter 2017, missing the Zacks Consensus Estimate of $0.37. Including one-time acquisition related costs, earnings came in at $0.12 per share, down from $0.56 recorded in first-quarter 2016.

Revenues were $174.2 million in the reported quarter, lower than $186.1 million reported in the year-ago quarter. Revenues also missed the Zacks Consensus Estimate of $176.4 million. Wheel unit shipments fell 10.6% from 3.2 million units in the prior-year quarter to 2.8 million. Value-added sales, i.e., net sales less pass-through charges for aluminum decreased 6.7% to $95.5 million, weakened by lower unit volume.

Gross profit fell to $19.2 million (11% of net sales) from $27.7 million (14.9%) in the prior-year quarter. Gross margin, as of value-added sales, declined from 27.1% a year ago to 20.1%, owing to lower unit shipments and higher manufacturing expenses, partially offset by improved product mix.

Selling, general and administrative expenses increased to $15.3 million in first-quarter 2017 from $9 million in the prior-year quarter. Operating income was $3.9 million (2.3% of sales) compared with $18.7 million (10.1% of sales) a year ago. Operating margin, as a percentage of value-added sales, fell to 4.1% from 18.3% in the year-ago quarter due to acquisition expenses and lower gross margin.

Capital Deployment

In first-quarter 2017, Superior Industries repurchased 215,841 shares for $5 million. The company also paid a quarterly dividend of $0.18 per share.

The company expects to pay dividend of roughly $18 million in 2017.

Financial Details

In first-quarter 2017, Superior Industries’ cash outflow from operations was $1.6 million against inflow of $16 million in the year-ago period. The decrease resulted from a lower net income and greater use of cash from working capital.

Outlook

The projections provided by the company do not include any future impact from the acquisition of UNIWHEELS. Superior Industries continues to expect net sales for 2017 in the range of $730–$750 million. Unit shipments in 2017 are expected in the range of 12−12.25 million.

Superior Industries expects value-added sales in the band of $400–$410 million and EBITDA in the range of $97−$105 million.

The company continues to project capital expenditures of around $50 million for 2017. The effective tax rate is still estimated in the range of 25−28%.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.

Superior Industries International, Inc. Price and Consensus

 

VGM Scores

At this time, the stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with a '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.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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