92% Market Share with Good Organic Growth and Growing Margins
- Gentex is growing its top line 6%-to-10% organically, even with only minimal growth in global automotive production, due to increased mirror penetration (still only 28% penetrated for interior and 8% for exterior) and advanced features including HomeLink, SmartBeam, the Full Display Mirror and frameless mirrors.
- The shares trade at 15.7x our 12-month forward EPS estimate, despite EPS projected up 13% in 2017 to a record $1.34 and 11% in 2018.
- The Company has been able to expand its operating margins over the last 15 years to around 30% despite automotive customer pricing pressure of 2%-to-3% annually, attributable to its new product focus and specialty niche.
Gentex designs and manufactures automatic-dimming rearview mirrors and electronics for the automotive industry, dimmable aircraft windows for the aviation industry, and commercial smoke alarms and signaling devices for the fire protection industry. The company's key business involves designing, developing, manufacturing and marketing interior and exterior automatic-dimming automotive rearview mirrors that use electrochromic technology to dim in proportion to the amount of headlight glare from trailing vehicle headlamps. The company also designs, develops and manufactures various electronics features to the interior and exterior automotive rearview mirrors as well as interior visors and overhead consoles.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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