On Oct 4, 2013, Zacks Investment Research raised Superior Industries International, Inc. (SUP) to a Zacks Rank #1 (Strong Buy). The upgrade was based on the company’s strong product portfolio, sturdy financial position, debt-free balance sheet and increasing income from Mexican operations.
Why the Upgrade?
Superior Industries’ earnings per share of 23 cents for the second quarter of 2013 was in line with the year-ago quarter, but outpaced the Zacks Consensus Estimate by 6 cents. The company reported positive earnings surprise in 3 out of the last 4 quarters with an average beat of 17.28%.
Since then, the Zacks Consensus Estimate for Superior Industries’ earnings in 2013 increased 14.5% to 79 cents per share. Meanwhile the estimate for 2014 improved 9.7% to 79 cents per share.
Superior Industries has a strong product portfolio that is geared to suit current market trends, thus making it the largest manufacturer of aluminum wheels for passenger cars and light-duty vehicles in North America. Moreover, the company’s Mexican operations, which contributed 62% of the total production in the first half of 2013, are witnessing increasing operating income.
Further, Superior Industries has no bank or other interest bearing debt on its balance sheet. The strong financial position prompted management to announce a 12.5% hike in its quarterly cash dividend to 18 cents per share in August. The 2 cents per share hike is payable on Oct 18, 2013 to shareholders of record as of Sep 27, 2013.
Superior Industries has already paid the entire dividend of 64 cents per share (based on the old dividend of 16 cents per quarter) for 2013 in an accelerated cash dividend payment on Dec 28, 2012 to shareholders of record as of Dec 21, 2012. The new dividend of 18 cents per share is expected to be declared in the fourth quarter of 2013 and paid in Jan 2014.
Other Stocks to Consider
Other stocks that are performing well in the auto and truck business are Denso Corp. (DNZOY), Lear Corp. (LEA) and Fuel Systems Solutions, Inc. (FSYS). All these companies carry a Zacks Rank #1 (Strong Buy).