Trimming 2017 Estimate Slightly; 2Q Beat by a Penny
- 2Q17 (June) EPS of 31 cents (vs 30 cents last year), rose 3% YoY and were 1 cent above our estimate as better-than-anticipated sales and a lower tax rate more than offset a reduced gross margin;
- For 2017, our EPS estimate is now $1.25 (from $1.28), up 5% from a record 2016, given lower growth from SmartBeam, potentially higher sales of lower margined base mirrors and auto production headwinds;
- For 2018, our EPS estimate remains $1.38, up 10% from our 2017 projection;
- Cash and investments net of debt amounted to $765 million, or $2.24 per share (equal to 13% of the share price).
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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