Why International Paper (IP) Could Beat Earnings Estimates Again
A month has gone by since the last earnings report for Superior Industries International, Inc. SUP. Shares have lost about 10.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is SUP 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 drivers.
Superior Industries Q4 Earnings Surpass Estimates
Superior Industries’ adjusted earnings of 38 cents per share for fourth-quarter 2017 topped the Zacks Consensus Estimate of 24 cents. Including after-tax expense and the impact of U.S. tax reform, net loss for the quarter was $4.6 million or 50 cents per share.
Revenues were $361.8 million in the reported quarter, missing the Zacks Consensus Estimate of $363.8 million. However, the reported figure was higher than $188.3 million recorded in the year-ago quarter.
Wheel unit shipments were 5.4 million compared with 3.1 million in the prior-year quarter. The rise is primarily due to the addition of its European operations, partly offset by a decline in the North American market compared with the prior-year quarter. Value-added sales, i.e., net sales minus pass-through charges for aluminum, increased to $203.5 million compared with $106.4 million in fourth-quarter 2016.
Gross profit rose to $39.7 million from $18 million in the year-ago quarter. The increase was due to the addition of European operations, partly offset by non-recurring effects of purchase, accounting adjustments of $1.3 million related to the buyout of UNIWHEELS and ongoing amortization of intangibles related to the acquisition.
Selling, general and administrative expenses jumped to $25.9 million in fourth-quarter 2017 from $6.9 million in the prior-year quarter, resulting from the addition of European operations, costs of around $7.2 million linked with the acquisition and integration of UNIWHEELS and compensation expenses in North America.
Full-Year 2017 Results
Superior Industries reported loss of $1.01 per share in 2017, down from earnings per share of $1.62 in 2016.
In 2017, revenues increased to $1,108.1 million from $732.7 million in 2016.
In fourth-quarter 2017, Superior Industries’ net cash, generated from operating activities, was $46.5 million compared with $39.2 million in the year-ago period. The increase was primarily due to the rise in working capital and the addition of European operations, which were partly offset by expenses related to the acquisition.
For 2018, Superior Industries reaffirmed its net sales, value-added sales, adjusted EBITDA, capital expenditures and working capital.
The company expects net sales for 2018 to be $1.45-$1.5 billion, driven by 21.25-21.6 million units of shipment. Superior Industries expects value-added sales to be $800-$835 million. Adjusted EBITDA is expected to be $185-$200 million. The company projects capital expenditure to be around $95 million.
How Have Estimates Been Moving Since Then?
In the past month, 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
Superior Industries International, Inc. Price and Consensus | Superior Industries International, Inc. Quote
At this time, SUP has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. 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.
Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, SUP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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