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Gentex (GNTX) Misses Q4 Earnings Estimates by a Whisker

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Gentex Corporation (GNTX - Free Report) reported fourth-quarter 2022 earnings of 37 cents per share, marginally missing the Zacks Consensus Estimate of 38 cents but up 5.7% from 35 cents recorded in the year-ago quarter.

This Zeeland-based automotive products supplier reported net sales of $493.6 million, falling short of the Zacks Consensus Estimate of $496 million. However, sales increased 18% from the year-ago period. The company recorded a gross margin of 31.2%, lower than the year-ago quarter’s 34.3%, due to an increase in the cost of raw materials, unfavorable product mix, and rising manufacturing costs originating from increasing labor costs and inefficiencies caused by customer order.

Gentex Corporation Price, Consensus and EPS Surprise

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 — which have the highest contribution to Gentex’s revenues — totaled $482.9 million in the fourth quarter, 18% higher than $409.6 million reported in the year-ago quarter and nominally higher than the Zacks Consensus Estimate of $482 million. In the reported quarter, auto-dimming mirror shipments in the North American market increased 5% to 3,393,000 units but lagged the consensus mark of 3,542,000 units. Shipments rose 15% year over year in the international markets to 7,611,000 units and topped the Zacks Consensus Estimate of 7,289,000 units. Total shipments increased 12% to 11,004,000 units, outpacing the consensus mark of 10,831,000 units.

Other net sales, which include dimmable aircraft windows and fire protection products, increased 5% from the year-ago quarter’s $10.2 million to $10.7 million but missed the consensus metric of $11.01 million. Fire protection sales increased 37% year over year during the quarter under review. Gentex continues to expect dimmable aircraft window sales to be hampered until a meaningful recovery of the aerospace industry begins and the Boeing 787 aircraft production levels get a boost.

Financial Tidbits

Total operating expenses rose 7% year over year to $59.7 million in fourth-quarter 2022. Engineering and R&D expenses increased to $35 million from $31.3 million. SG&A expenses marginally rose to $24.78 million from nearly $24.65 million recorded in the corresponding quarter of 2021.

Gentex paid dividends of 12 cents per share in the quarter. During the quarter, it repurchased 0.8 million shares of its common stock at an average price of $27.17 per share for a total sum of $21.7 million. As of Dec 31, 2022, the company had nearly 20.8 million shares remaining for buyback per its previously announced share repurchase plan. Gentex had cash and cash equivalents of nearly $215 million as of Dec 31, 2022, down from $262.3 million as of Dec 31, 2021.


Per IHS Markit, full-year 2023 and 2024 LVP is expected to increase 4% each on a year-over-year basis.

For the first half of 2023, Gentex remains concerned about continued margin pressure.It expects impedingeffects from supply and labor constraints to potentially hinder global light vehicle production growth rates.

Gentex’s 2023 net sales are estimated to be $2.2 billion. The gross margin is projected in the band of 32%-33%. Capital expenditure is anticipated within $200-$225 million. Operating expenses are estimated in the band of $260-$270 million.

Zacks Rank and Key Picks

Gentex currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked players in the auto space include Mercedes-Benz Group AG (MBGAF - Free Report) , Byd Co (BYDDY - Free Report) and BMW AG (BAMXF - Free Report) . All companies currently sport a Zacks Rank #1 (Strong Buy).

Mercedes Benz develops, manufactures, and sells passenger cars comprising premium and luxury vehicles of the Mercedes-Benz brand. The Zacks Consensus Estimate for MBGAF’s 2022 earnings implies year-over-year growth of 215%.

Byd is principally engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 sales and earnings implies year-over-year growth of 42% and 32%, respectively.

BMW is a multi-brand automobile manufacturer that focuses on the premium segments of the worldwide automobile and motorcycle markets. The Zacks Consensus Estimate for BAMXF’s 2022 sales and earnings implies year-over-year growth of 9.04% and 30.30%, respectively.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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