Superior Industries InternationalSUP

Morningstar Rating

Stock Research and Analysis

by David Whiston, CPA, CFE

Historically, more than 80% of Superior's sales have come from the Detroit Big Three, and as these firms have lost market share Superior's profits have declined significantly. Still, the company has taken necessary cost-cutting steps and recently completed Read more

Bulls Say

Superior's debt-free balance sheet means it can outlast competitors as it waits for vehicle demand to improve.

Low-cost foreign wheel makers are not as large a threat as some believe because shipping wheels from Asia to America is too expensive to be worth Detroit's time.

Moving so much capacity to Mexico should make earnings growth accelerate once production exceeds break-even levels. Read more

Bears Say

Despite lessening its exposure to Detroit automakers, about 80% of revenue comes from three firms, and no customer has a minimum purchase obligation.

A negative industry trend is that the rapid growth rate of aluminum wheel installation on cars and light trucks in the U.S. has slowed considerably since 1997, suggesting that the aluminum wheel market may have matured at about two thirds share.

Management has said that there is not much more cost-cutting they can do, and even if automakers cannot extract more price concessions, they are not going to give back previous price concessions. This situation is not conducive to Superior increasing profits in the future.

Growing the business in China may prove difficult because there are already plenty of Asian auto parts suppliers established in the market.

The vast majority of Superior's wheels are sold for light trucks instead of cars. Read more

Strategy

Superior has made several good restructuring moves over the years to deal with the harsher environment. Most importantly, management has achieved significant labor cost savings by closing some facilities Read more

Management

The company now known as Superior Industries International was founded by chairman Louis Borick in 1957. Louis, 83, was chairman, CEO, and president until 2003, when he resigned as president and his son Steven, 54, became president. Louis resigned as Read more

Profile

Founded in 1957 and based in Van Nuys, Calif., Superior Industries International is one of the leading manufacturers of aluminum wheels for sale to automakers. The company Read more

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