Mario Gabelli (Trades, Portfolio) is the founder, chairman, and CEO of Gabelli Asset Management Company Investors (GAMCO Investors) a $30 billion dollar global investment firm headquartered in Rye, New York.
The investor reported decreasing his stake in Superior Industries International (SUP, Financial), according to GuruFocus Real Time Picks. The guru has disclosed trimming its stake in the company to 2,069,601 shares from 2,089,301 shares held in the previous quarter. The stake amasses 8.40% of common stock outstanding.
The fund initiated the position more than five years ago, and during 2014, Gabelli added and reduced the stake to reach 2.069 million shares at the end of the second quarter of 2015, worth $34.7 million.
Superior Industries International’s shares lost 10% during the past 12 months and 15.4% year-to-date. We believe the company is going to recover and could generate margins above its peers.
The company designs, manufactures, and sells aluminum road wheels to the original equipment manufacturers in North America. It is a leading maker of cast aluminum road wheels for automotive OEMs, as well as a manufacturer of automotive aftermarket products. It also has a $447.3 million market cap.
For the first quarter, revenues decreased by 5.3% and earnings per share decreased as well ($0.16 vs $0.18). The net income has decreased by 10.1% when compared to the same quarter one year ago, to $4.33 million from $4.82 million.
In terms of valuation, the stock sells at a trailing P/E of 55.68x, trading at a premium compared to an average of 16.7x for the industry. To use another metric, its price-to-book ratio of 1.03x indicates a discount versus the industry average of 1.56x while the price-to-sales ratio of 0.61x is below the industry average of 0.71x. The ratios are close to a 3-year low.
According to Yahoo! Finance, the estimated one-year target share price is $ 22.83, so if you buy shares at current market price ($16.82), your return from price appreciation would be 35.7%. In addition, you have to consider any cash flow received by the asset.
On June 1, the board of directors declared a quarterly cash dividend of $0.18 per share, so investor will be paid a dividend of $0.72 at the end of the year, yielding 4.3% at current price. Thus, the total expected return for investing in Superior Industries is 40%, which we believe is an attractive stock return.
Hedge fund guru Chuck Royce (Trades, Portfolio) upped the stake by 34% to 651,600 shares in the first quarter of 2015.
Disclosure: Omar Venerio holds no position in any stocks mentioned.
