THRM - Embedded Expectations Analysis - 2018 05 08
Gentherm Incorporated (THRM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with an 11.8x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, which, despite the potential for near-term headwinds given management's negative sentiment, likely supports longer-term outperformance should THRM maintain profitability at current levelsSpecifically, management may have concerns about their rear seat heating and cooling products in the Hyundai Genesis and the Kia ON, and may lack confidence in the sustainability of cost advantages in their system over other modules in the market. Furthermore, they may have concerns about Hyundai's declining vehicle production in North America, and may lack confidence in the sustainability of Etratech growth going forward. That said, market expectations for Uniform ROA to decline to levels not seen since 2009 still appear too bearish. As such, multiple expansion and equity upside remain warranted in the long-term
Gentherm designs, develops, and manufactures thermal management technologies. The company's products provide solutions for automotive passenger comfort, battery thermal management, remote power generation, patient temperature management, and other consumer and industrial temperature control needs. The company has two segments: Automotive, which includes climate comfort systems, automotive cable systems, battery thermal management, and automotive electronic and software systems; and Industrial, which includes the company's remote power generation systems business, its patient temperature management systems business, its environmental testing equipment business and its research and product development division.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.