Missed it, beat it, missed it, beat it, missed it ...

For five quarters now, Superior Industries (NYSE:SUP) has provided a living illustration of the tricky business of selling car wheels to perennial corporate problem children like General Motors (NYSE:GM), Ford (NYSE:F), and DaimlerChrysler (NYSE:DCX) -- and newly troubled Nissan (NASDAQ:NSANY) as well. Sometimes Superior makes a profit. Sometimes it doesn't. Sometimes it misses analyst estimates. Sometimes it wallops 'em. If the pattern holds true tomorrow, Q4 2006's numbers should trump the analysts' best guesses. Fingers crossed.

What analysts say:

  • Buy, sell, or waffle? Nothing's changed since last quarter. Of the seven analysts still following Superior, one rates it a hold, and the rest say sell.
  • Revenues. On average, analysts expect quarterly sales to slide 4% to $211.2 million.
  • Earnings. They predict that last year's Q4 profit will give way to a $0.04 loss per share.

What management says:
Quoting directly from Superior's last earnings conference call, here's what CFO Jeff Ornstein had to say about the business:

"Key to understanding our third quarter financial results relate to trends in the auto industry. In my 23 years as Superior CFO, I cannot recall as sharp a reduction in production shipments on Superior programs without a strike or severe economic recession taking place. Third quarter, North American overall production was only down 9%. However, as you look into it further, domestic OEMs were down 14% with light trucks down 21% and several key truck platforms cuts of over 25%. These platforms included important Superior programs such as the Chrysler grand Cherokee Jeep, down 25%, and the Ford F-series down over 30%. In addition, the fourth quarter production schedule, with a 19% drop in light truck output, offers no relief. Modest truck inventory reductions, coupled with GM's new pickup product launch, are the only positives I'm able to report here. To quote most analysts' commentaries 'suppliers overexposed to Chrysler, Ford and GM are expected to struggle.'"

Bleak enough for ya?

What management does:
They say a picture is worth a thousand words. I'm guessing a table is worth a bit less, but I'm betting that if you scan the numbers below, you'll get a good picture of what's going on at Superior.

Margins

6/05

9/05

12/05

3/06

6/06

9/06

Gross

7.4%

6.8%

4.3%

2.8%

2.5%

1.5%

Operating

5.3%

4.6%

2.4%

0.8%

0.3%

(0.7%)

Net

3.7%

3.1%

(0.7%)

(1.8%)

(2.0%)

(3.0%)

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
How do I put this gently? Superior Industries earns a 1.5% margin on its sales. That is to say, out of every dollar's worth of wheels sold, it spends $0.98-and-a-half cents on the aluminum, labor, and energy that go into making the wheels. That leaves the company a penny and a half out of which to pay the rent, the electric bills, the remaining employees' paychecks -- everything. I'd say that Superior is in a "tough" business -- except that Ornstein employed so much more poetic a term on last quarter's conference call: "bloody."

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Fool contributor Rich Smith does not own shares of any company named above.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.