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Here's Why Superior Industries (SUP) Could be a Great Value Stock
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Superior Industries International, Inc. (SUP - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Superior Industries has a trailing twelve months PE ratio of 12.8, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.4. If we focus on the long-term PE trend, Superior Industries’ current PE level puts it below its midpoint over the past five years.
Also, the stock’s PE compares favorably with the industry’s trailing twelve months PE ratio, which stands at 13.8. At the very least, this indicates that the stock is undervalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Superior Industries has a P/S ratio of about 0.3. This is significantly lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this is fairly below the highs for this stock in particular over the past few years.
If anything, SUP is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Superior Industries currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Superior Industries a solid choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
Though Superior Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of B and a Momentum score of D. This gives SUP a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been disappointing. The current year has seen one estimate up in the past 30 days compared to two lower, while the next year estimate has seen no upward or downward revisions in the same time period.
As a result, the current year consensus estimate has fallen by 97% in the past month, while the next year estimate has gone lower by 21.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Superior Industries International, Inc. Price and Consensus
This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
Superior Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a decent industry rank (top 22% of more than 250 industries) signals that the stock is likely to benefit from broader factors. In fact, over the past two years, its industry has clearly outperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
Here's Why Superior Industries (SUP) Could be a Great Value Stock
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
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One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Superior Industries International, Inc. (SUP - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Superior Industries has a trailing twelve months PE ratio of 12.8, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.4. If we focus on the long-term PE trend, Superior Industries’ current PE level puts it below its midpoint over the past five years.
Also, the stock’s PE compares favorably with the industry’s trailing twelve months PE ratio, which stands at 13.8. At the very least, this indicates that the stock is undervalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Superior Industries has a P/S ratio of about 0.3. This is significantly lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this is fairly below the highs for this stock in particular over the past few years.
If anything, SUP is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Superior Industries currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Superior Industries a solid choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
Though Superior Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of B and a Momentum score of D. This gives SUP a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been disappointing. The current year has seen one estimate up in the past 30 days compared to two lower, while the next year estimate has seen no upward or downward revisions in the same time period.
As a result, the current year consensus estimate has fallen by 97% in the past month, while the next year estimate has gone lower by 21.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Superior Industries International, Inc. Price and Consensus
Superior Industries International, Inc. Price and Consensus | Superior Industries International, Inc. Quote
This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
Superior Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a decent industry rank (top 22% of more than 250 industries) signals that the stock is likely to benefit from broader factors. In fact, over the past two years, its industry has clearly outperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>