GNTX - Embedded Expectations Analysis - 2021 09 03
Gentex Corporation (GNTX:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 14.6x Uniform P/E. At these levels, market expectations are for Uniform ROA compression, and management may have concerns about the recovery in light vehicle production, margin compression, and the potential of their Full Display Mirror system.Specifically, management may be concerned about the pace of the recovery of light vehicle production, the impact of consumer electronics demand on the auto industry, and continued supply chain headwinds, particularly on the silicon side. Additionally, they may lack confidence in their ability to change product concepts and designs to get more out of constrained components, sustain share repurchases, and find accretive M&A opportunities. Furthermore, management may be concerned about the potential impact of raw material costs on margins and the drag of electronics content on their seasonal ramp. Finally, they may be overstating the potential of their Full Display Mirror system and they may lack confidence in their ability to manage inventory levels.
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.
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