Superior Industries International (New York Stock Exchange: SUP) designs and manufactures aluminum wheels for OEM and aftermarket distributors in Europe and North America. We also supply aluminum wheels to automobile manufacturers. The company offers products under the RIAL, ANZIO and ATS brands. name. They recently announced FY22, FY2010 4th Quarter ResultsThis report analyzes its financial performance and discusses future growth prospects. Even after some macroeconomic headwinds, they were able to deliver solid annual results. This is very impressive. Plus, they look technically strong as well. Therefore, I give SUP a purchase rating.
SUP recently announced its 2022 and Q4 2022 results. Net sales for fiscal year 22 were $1.6 billion, an increase of 18.5% compared to fiscal year 21. I think the increase in sales was due to the rise in aluminum prices. Customer paid more for aluminum in his 22nd year.As As a result, sales increased in North America and Europe. Net sales in the North America region for fiscal year 22 were $943.7 million, an increase of 26.6% compared to fiscal year 21. Europe increased 8.8% to $696.2 million compared to FY21. Net income for fiscal year 22 was $166.4 million, a significant increase of 873.6%. I believe the main reason for the increase is higher value-added sales.
Net sales for the fourth quarter of fiscal 2022 were $402.1 million, an increase of 9.1% compared to the fourth quarter of fiscal 2021. We believe that increased consumer demand for high-end wheels and cost inflation passed on to consumers are the main causes of the increase. Net sales in North America and Europe increased 10.8% and 7.3%, respectively, in the fourth quarter of 2022 compared to the fourth quarter of 2021. Net income for the fourth quarter of FY22 was $16.5 million and net loss for the fourth quarter of FY21 was $3.9 million. In my opinion, a good wheel mix and high value-added sales driven by customer recovery are the main reasons for the increase. They were able to deliver solid results even after some macroeconomic headwinds, including high inflation, lower production volumes and volatility in OEM production. This shows how efficient and promising the company is.
SUP is trading at the $7.2 level. It has been trading below $6 since November 2021. After twice unsuccessfully trying to break through that price, it recently did so with a giant green candle. This shows that the recent breakout is significant and could surge from current levels. The company is showing strength and expects the price to rise to $9 in the near future. In my view, we should wait for the retest and once the retest is complete, we can make a new entry for the stock.
Should I invest in SUP?
Estimated FY23 revenues of $1.7 billion, 3.7% higher than FY22 revenues. 3.7% growth isn’t a big deal, but it’s very impressive to me. I say this because the auto industry has faced various headwinds since last year, including inflation, supply chain disruptions and production volatility, and will likely continue to do so in 2023. The industry is struggling and posting disappointing results. It is very impressive that SPU delivered a solid yearly performance and looks forward to positive earnings growth in FY23. I think the demand for premium products is increasing. Achieve your revenue goals.
Now let’s talk about the evaluation part. To determine that rating, we use two metrics. The first ratio is the P/E ratio. This is a method of valuing a business by comparing the cost and return of equity. Their P/E (FWD) ratio is 8.48x and sector ratio is 14.66x. It shows that it is underrated. The second ratio is EV/EBITDA, which compares a company’s overall valuation to EBITDA. The EV/EBITDA (FWD) ratio is 4.29x and the sector ratio is 9.98x. Looking at both ratios, I think it’s undervalued, has huge growth potential, and can deliver significant returns to shareholders.
The price of aluminum has a significant impact on the total cost of the wheel, at which price it will be sold to the customer. The timing of price adjustments is based on specific customer agreements and can vary from monthly to quarterly. Changes in some open market indices are based on changes affecting his OEM customer prices for aluminum fluctuations. For this reason, the timeliness of price changes in raw materials such as aluminum rarely coincides with changes in cost of goods sold, which can cause fluctuations in a company’s gross margins and affect its balance sheet.
Even after some challenges, they were able to deliver solid annual and quarterly results. They’ve dealt very well with high inflation, supply chain disruptions and OEM production volatility. This shows how efficient the management is. They offer optimistic earnings guidance for his 2023 fiscal year, when nearly every company in the industry struggles to sustain growth rates. In addition, the stock price is very bullish and has the potential to bring big profits down the road. The valuation also looks good, so after analyzing all the factors, we rate SUP as a buy.