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Gentex Corp - Stock Quote GNTX

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Morningstar's Gentex Corp Stock Analysis

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Gentex's First-Quarter Results Solid Despite Parts Shortages

Analyst Note

| David Whiston, CFA, CPA, CFE |

Gentex’s first-quarter results gave us no reason to change our fair value estimate. Management seems to be doing a solid job handling supply chain disruptions. Diluted EPS of $0.37 beat the Refinitiv consensus of $0.32 but fell 20% year over year. Mirror unit volume declined 7%, which was better than the 11% industry decline in light-vehicle production across Gentex’s primary markets of North America, Europe, and Japan and Korea. Higher freight costs and lower volume were somewhat offset by finding operating efficiencies, but gross margin fell 360 basis points to 34.3%, slightly below full-year guidance of 35%-36% and identical to the fourth-quarter 2021 level. Gentex did not get any help from automakers on passing along cost increases; it said those negotiations are ongoing for the rest of the year and into 2023. These negotiations are often a slow process done automaker by automaker, and the current volatile environment makes it harder to negotiate terms. We agree with management’s optimism for the chance of favorable operating leverage after 2022.

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Gentex Corp's Company Profile

Business Description

Gentex was founded in 1974 to produce smoke-detection equipment. The company sold its first glare-control interior mirror in 1982 and its first model using electrochromic technology in 1987. Automotive revenue is about 98% of total revenue, and the company is constantly developing new applications for the technology to remain on top. Sales in 2021 totaled about $1.7 billion with 41.8 million mirrors shipped. The unit mix breaks out as 65% interior and 35% exterior, versus about 32% exterior in 2020. The company is based in Zeeland, Michigan.

600 North Centennial Street
Zeeland, MI, 49464
T +1 616 772-1800
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 4,998

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