It has been about a month since the last earnings report for Superior Industries (SUP - Free Report) . Shares have lost about 11.6% 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 catalysts. <p style="text-align: justify;"><strong><u>Superior Industries' Beats on Q2 Earnings & Revenues</u></strong></p><p style="text-align: justify;">Superior Industries’ adjusted earnings of 25 cents per share beat the Zacks Consensus Estimate of 7 cents. Including the impact of acquisition-related items, net income was $8.1 million or 9 cents per share.</p><p style="text-align: justify;">Net Sales were $389 million in the reported quarter, beating the Zacks Consensus Estimate of $383.5 million. Further, the reported figure was higher than $240.6 million recorded in the year-ago quarter.</p><p style="text-align: justify;">During the quarter under review, the company reported record wheel unit shipments of 5.6 million compared with 3.8 million in the prior-year quarter. The rise is primarily due to the addition of two months of European operations, which added 1.7 million units of shipment. Value-added sales, i.e. net sales minus pass-through charges for aluminum, increased to $204.4 million compared with $130.4 million in second-quarter 2017.</p><p style="text-align: justify;">Gross profit rose to $53.6 million from $20.1 million in the year-ago quarter. The increase was due to enhanced operational efficiency in North America and the addition of two months of the European operations.</p><p style="text-align: justify;">Selling, general and administrative expenses jumped to $22.3 million in second-quarter 2018 from $22.1 million in the prior-year quarter.</p><p style="text-align: justify;"><strong>Financial Details</strong></p><p style="text-align: justify;">In second-quarter 2018, Superior Industries’ net cash, provided by the operating activities, was $16.4 million compared with $8.5 million used in the year-ago period. Capital expenditure was $15.3 million compared with $13.2 million recorded in the prior-year quarter.</p><p style="text-align: justify;"><strong>Outlook</strong></p><p style="text-align: justify;">For 2018, Superior Industries revised its guidance of net sales, adjusted EBITDA and effective tax rate. The revised figures are based on the company’s first-half performance of 2018.</p><p style="text-align: justify;">For 2018, the company expects net sales of $1.52-$1.56 billion compared with the prior expectation of $1.45-$1.5 billion. Adjusted EBITDA is expected to be $190-$205 million from the prior guidance of $185-$200 million. Moreover, the effective tax rate is now anticipated to be 25-29% compared with the previous outlook of 10-15%.</p><p style="text-align: justify;">However, the company reaffirmed its value-added sales of $800-$835 million. Furthermore, the capital expenditure projection of around $95 million has been kept unchanged.</p>
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 -214.29% due to these changes.
At this time, Superior Industries has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
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.