Gentex To Host Three Vehicle Unveils And Showcase Technology For Automotive Oems, Race Teams, And The Aftermarket At Sema 2024

Gentex Corporation’s GNTX third-quarter 2024 earnings per share (EPS) of 53 cents beat the Zacks Consensus Estimate of 50 cents and increased 18% year over year.

This Zeeland-based automotive products supplier reported net sales of $609 million, which missed the Zacks Consensus Estimate of $611 million but rose 6% from the year-ago period. The company recorded a gross margin of 33.5%, reflecting a rise of 30 basis points from the third quarter of 2023 due to higher sales and reduced purchasing costs.

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Gentex Corporation Price, Consensus and EPS Surprise

Gentex Corporation price-consensus-eps-surprise-chart | Gentex Corporation Quote

Segmental Performance

The Automotive segment’s net sales — contributing the most to Gentex’s revenues — totaled $596.5 million in the third quarter, which was 5.7% higher than the $564.5 million reported in the year-ago quarter but missed our estimate of $614.4 million. In the reported quarter, auto-dimming mirror shipments in the North American market decreased 4% to 3,823,000 units. Shipments fell 3% year over year in the international markets to 8,399,000 units. Total shipments declined 3% to 12,221,000 units.

Other net sales, which include dimmable aircraft windows and fire protection products, increased from the year-ago quarter’s $11.3 million to $12 million but lagged our estimate of $12.4 million. Fire protection sales increased $1.8 million from the year-ago quarter’s figure. Dimmable aircraft window sales decreased $1.9 million from the year-ago quarter’s level.

Financial Tidbits

Total operating expenses rose 13.5% year over year to $78.3 million in third-quarter 2024. Engineering and R&D expenses increased to $48.2 million from $40.2 million. SG&A expenses rose to $30.1 million from $28.8 million recorded in the corresponding quarter of 2023.

GNTX paid a dividend of 12 cents per share in the quarter. It repurchased 3.2 million shares of its common stock at an average price of $30.16 per share. As of Sept. 30, 2024, the company had nearly 10.1 million shares remaining for buyback, per its previously announced share repurchase plan. Gentex had cash and cash equivalents of about $179.6 million as of Sept. 30, 2024.

GNTX Revises 2024 Guidance

Gentex now expects 2024 net sales in the range of $2.35-$2.40 billion, down from the previous estimate of $2.40-$2.50 billion. The gross margin is projected in the band of 33.5-34%, down from the previous guidance of 34-34.5%. Capital expenditure is anticipated between $150 million and $175 million, down from the previous outlook of $175-$200 million. Operating expenses are estimated in the band of $295-$305 million.

Zacks Rank & Key Picks

GNTX currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the auto space are Yamaha Motor Co., Ltd. YAMHF, BYD Company Limited BYDDY and Suzuki Motor Corporation SZKMY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for YAMHF’s 2024 sales and earnings suggests year-over-year growth of 6.62% and 8.55%, respectively. EPS estimates for 2024 and 2025 have improved 14 cents and 18 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 21.88% and 19.52%, respectively. EPS estimates for 2024 and 2025 have improved by 7 cents and 13 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for SZKMY’s fiscal 2025 sales and earnings suggests year-over-year growth of 7.36% and 22.51%, respectively. EPS estimates for fiscal 2025 and 2026 have improved by 78 cents and 99 cents, respectively, in the past 60 days.

Zacks Investment Research

Gentex (GNTX) reported $608.53 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 5.7%. EPS of $0.53 for the same period compares to $0.45 a year ago.

The reported revenue compares to the Zacks Consensus Estimate of $611.33 million, representing a surprise of -0.46%. The company delivered an EPS surprise of +6.00%, with the consensus EPS estimate being $0.50.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how Gentex performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Auto-Dimming Mirror Shipments - Total Interior Mirrors: 7.86 million versus the two-analyst average estimate of 7.91 million.
• Auto-Dimming Mirror Shipments - Total Exterior Mirrors: 4.36 million compared to the 4.47 million average estimate based on two analysts.
• Auto-Dimming Mirror Shipments - Total Auto-Dimming Mirror Units: 12.22 million versus the two-analyst average estimate of 12.38 million.
• Auto-Dimming Mirror Shipments - Total North American Mirror Units: 3.82 million versus the two-analyst average estimate of 3.96 million.
• Auto-Dimming Mirror Shipments - International Exterior Mirrors: 2.83 million versus 2.83 million estimated by two analysts on average.
• Auto-Dimming Mirror Shipments - North American Exterior Mirrors: 1.53 million versus the two-analyst average estimate of 1.64 million.
• Auto-Dimming Mirror Shipments - Total International Mirror Units: 8.4 million compared to the 8.42 million average estimate based on two analysts.
• Auto-Dimming Mirror Shipments - International Interior Mirrors: 5.57 million versus 5.59 million estimated by two analysts on average.
• Auto-Dimming Mirror Shipments - North American Interior Mirrors: 2.29 million versus the two-analyst average estimate of 2.32 million.
• Revenue- Other: $12 million versus $12.99 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +6.2% change.
• Revenue- Automotive Products: $596.50 million versus the three-analyst average estimate of $598.51 million. The reported number represents a year-over-year change of +5.7%.

View all Key Company Metrics for Gentex here>>>

Shares of Gentex have returned -4.2% over the past month versus the Zacks S&P 500 composite's +1.4% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term.

Zacks Investment Research

Gentex (GNTX) came out with quarterly earnings of $0.53 per share, beating the Zacks Consensus Estimate of $0.50 per share. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 6%. A quarter ago, it was expected that this maker of automatic-dimming rearview mirrors and other products would post earnings of $0.52 per share when it actually produced earnings of $0.37, delivering a surprise of -28.85%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Gentex, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $608.53 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.46%. This compares to year-ago revenues of $575.85 million. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Gentex shares have lost about 9.2% since the beginning of the year versus the S&P 500's gain of 21.8%.

What's Next for Gentex?

While Gentex has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Gentex: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.54 on $633.57 million in revenues for the coming quarter and $1.88 on $2.41 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 27% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Innoviz Technologies Ltd. (INVZ), is yet to report results for the quarter ended September 2024. The results are expected to be released on November 13.

This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of +22.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Innoviz Technologies Ltd.'s revenues are expected to be $5.03 million, up 44.6% from the year-ago quarter.

Zacks Investment Research