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The Zacks Analyst Blog Highlights: Superior Industries, Ford Motor, General Motors, Oshkosh and Fred's

Zacks Equity Research

For Immediate Release

Chicago, IL – March 11, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Superior Industries (SUP), Ford Motor Co. (F), General Motors Company (GM), Oshkosh Corporation (OSK) and Fred's Inc. (FRED).

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Here are highlights from Friday’s Analyst Blog:

Superior Cut to Underperform

On Mar 7, we downgraded cast aluminum road wheels manufacturer Superior Industries (SUP) to Underperform, based on the company’s significant customer concentration risk from the Detroit Big Three and lower-than-expected fourth quarter 2012 earnings.

Why the Downgrade?

Superior Industries’ profits declined to $2.7 million or 10 cents per share in the fourth quarter of 2012 from $12.0 million or 44 cents in the same quarter of 2011. Earnings per share were substantially lower than the Zacks Consensus Estimate of 26 cents per share.

Revenues in the quarter fell 3% to $210.0 million due to flat sales volume and a reduction in average selling price due to lower aluminum prices.

Following the release of the fourth quarter results, the Zacks Consensus Estimate for 2013 decreased 17.5% to 85 cents per share. The Zacks Consensus Estimate for 2014 remained flat at 95 cents per share. Currently, Superior Industries retains a Zacks Rank #5 (Strong Sell).

Superior Industries remains under pressure due to customer concentration. The Big Three customers of the company -- Ford Motor Co. (F), General Motors Company (GM) and Chrysler -- constitute 75% of its total wheel sales. Any fluctuation in demand from them will adversely affect the company.

The company faces increased competition in terms of price, technology, product quality, delivery and overall customer service. In addition, the automotive component supply industry is highly competitive in nature. Superior faces competition from the well established companies as well as from the newly formed companies in low-cost foreign markets of China.

Other Stocks to Consider

Oshkosh Corporation (OSK), a Zacks Rank #1 (Strong Buy) stock, is performing well in the industry where Superior Industries operates.

Fred’s Sales Slip in January

Recently, Fred's Inc. (FRED) reported total sales and comparable sales for Feb 2012. While total sales increased marginally from the comparable period in the prior year, comparable sales declined. Deferred sales related to the spring layaway program would have added 60 bps of growth to both total and comparable store sales.

Comparable store sales for the month fell 1.5% compared to a slip of 0.7% in the year-ago month. The decline was attributed to lower transactions due to economic headwinds, ongoing tax processing and refunds, and higher payroll taxes.

Comparable store sales for general merchandise was however positive for the second straight quarter, helped by new products in auto/hardware and strength at its discount tobacco shop. Pharmacy department sales saw positive script growth that was offset by the ongoing brand-to-generic shift in the pharmacy industry, which affected comparable sales by 280 basis points.

Total sales for Feb 2013 marginally increased to $159.2 million compared to $159.0 million a year ago.

The company opened one store and an Xpress pharmacy during the month.

Guidance Lowered

Keeping in view higher insurance and operating cost and lowering of prices on basic and consumable products, the company lowered its fourth quarter 2012 earnings to the range of 16 cents to 21 cents per share compared to the previously announced range of 25 cents to 31 cents announced in Jan 2013.

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