Hayes Lemmerz (NASDAQ:HAYZ), a manufacturer of steel and aluminum wheels, doesn't exactly have an exceptional operating history. The company has had very little free cash flow for the past 15 years and hasn't reported a profit since fiscal 1999. Despite this lack of earnings power, management decided to make huge acquisitions in the late '90s, overleveraging the company and causing it to file for bankruptcy in late 2001.

It has been out of bankruptcy for about two years now, and the earnings results haven't changed much. Yesterday's second-quarter report showed a balance sheet with $710 million in long-term debt and an income statement with a loss of $0.20 per share. There was a 20% increase in international sales, however, and the stock, trading at only 39% of its book value, shot up more than 10%.

Hayes could be doing much better, though. SuperiorIndustries (NYSE:SUP), one of Hayes' main competitors in the U.S. aluminum-wheel segment, has a much brighter operating history. The company has reported positive free cash flow and earnings for the past five years. It has no debt and currently holds more than $100 million in cash and short-term investments. It hasn't overleveraged itself with high-priced acquisitions and, most important of all, it has continually sold its products at profitable price points.

But as Warren Buffett puts it: "When a management with a reputation for brilliance tackles a business with a reputation for poor economics, it is the reputation of the business that stays intact." In auto parts manufacturing, global competitors can operate with a cheaper labor base and at a lower tax rate. This makes for severe pricing competition. As Superior's management intimated in the most recent earnings report, the company's two largest customers, Ford (NYSE:F) and GM (NYSE:GM), could start awarding contracts to lower-priced competitors. Seventy-four percent of Superior's revenues come from these struggling automakers, so this scenario would have a very negative impact on the business. Some certainly think so: Almost 30% of Superior's shares are sold short.

Even with its solid financial position, Superior is going to have a tough time rewarding shareholders in the years to come. Hayes, on the other hand, with a pile of high-interest debt and a history of poor earnings, will have a hard time surviving. Management must reverse the trend of sub-par performance and find ways to compete effectively against pricing competition. Otherwise, this stock could crash and burn.

Looking for an undervalued stock with a lot less risk? Check out the Motley Fool Inside Value newsletter, where Philip Durell brings you two valuable picks every month. Click herefor a free trial.

Fool contributor Matt Thurmond doesn't own shares of any company mentioned in this article.