Superior Industries International, Inc. (SUP): A Bull Case Theory

We came across a bullish thesis on Superior Industries International, Inc. (SUP) on Alpha Ark’s Substack. In this article, we will summarize the bulls’ thesis on SUP. Superior Industries International, Inc. (SUP)’s share was trading at $0.50 as of 27^th May. SUP’s forward P/E was 4.01 according to Yahoo Finance.

Superior Industries, one of the world’s largest aluminum wheel manufacturers, is emerging as a compelling deep-value opportunity despite ongoing industry headwinds. The company produces nearly 14 million units annually, serving major automakers like GM, Ford, VW, and Toyota, and has taken aggressive steps to counter macroeconomic challenges.

After facing disruption from COVID, a post-pandemic demand peak, and now softening consumer demand, Superior has enacted cost-cutting measures and shifted operations to lower-cost regions such as Poland and Mexico. Although the company is burdened with $483 million in high-interest debt and $300 million in preferred stock, its current Net Debt/EBITDA ratio of 3.4x remains within covenant limits, supported by healthy liquidity. Notably, recent U.S. tariffs on imports have had minimal impact, as only 25% of Mexican production is exposed, and most customers assemble in Mexico, shielding the business. On the contrary, these tariffs may strengthen Superior’s competitive moat by disadvantaging Chinese and Moroccan rivals.

Value-added sales per wheel have grown 34% since 2019 due to a shift toward larger, premium, and EV-focused products, though total unit volumes declined from 19 million to 14 million due to lower-end volume losses. However, Superior remains the go-to supplier for most mid-to-high-end customers and is operating below capacity, with new contracts poised to lift volumes in 2025. Trading at just 5.6x 2025 EV/EBITDA and turning cash flow positive, the company offers significant upside. Valuations suggest a $27–$30/share target by 2028, reflecting 12–13x potential returns. Despite sector volatility and leverage risks, Superior’s transformation positions it as a high-upside asymmetric bet.

Previously, we have covered Superior Industries International, Inc. (SUP) in November 2024 wherein we summarized a bullish thesis by everyonehatespoetry on Substack. The author cited improving earnings, strong value-added margins, and potential refinancing options despite a complex capital structure. The article emphasized that EV and SUV trends were driving growth, while leverage remained the main challenge.

Superior Industries International, Inc. (SUP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held SUP at the end of the first quarter which was 8 in the previous quarter. While we acknowledge the risk and potential of SUP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SUP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.