Gentex Corporation (GNTX - Free Report) announced that its board approved a 5% increase in its quarterly cash dividend on common stock to 11.5 cents per share. The revised dividend will be paid on Apr 24 to shareholders of record as of Apr 10, 2019.
Apart from the dividend hike, the company’s board also agreed to repurchase an added 25 million of common shares. However, the number of share repurchases can vary, depending upon macroeconomic issues and market trends. The announcement on dividend increase and added share repurchase authorization is in sync with Gentex’s capital-allocation strategy declared last year.
In 2018, this Zeeland, MI-based company announced that its board approved changes in the capital-allocation strategy that will increase return of capital to shareholders. The company is committed to increase dividends by 10% annually. In March 2018, Gentex increased its dividend payment to 44 cents per share from the earlier payout of 40 cents. The same amount was paid in all of the trailing three quarters. Additionally, it repurchased 26.4 million shares for $591 million in 2018.
Gentex Corporation Price and Consensus
Apart from increasing shareholder returns, the company invests in technology evolution to support future growth. With continuous investment in new technology, Gentex’s cost control procedures enabled it to lower its capital expenditure in 2018. The company’s annual capital expenditure was $86 million compared with $104 million recorded in the prior year.
Softened unit production in Europe, North America, Japan, China and Korea lowered Gentex’s net sales in fourth-quarter 2018. Net sales in the quarter declined 1% year over year to $453.4 million, missing the Zacks Consensus Estimate. Further, the company’s earnings were 41 cents per share, missing estimates.
For 2019, Gentex expects revenues of $1.83-$1.93 billion, depending on the current IHS Markit forecasts for light-vehicle production in key markets. Further, gross margin is anticipated to be 36-37% in the current year.
Over the past six months, shares of Gentex have outperformed the industry it belongs to. During that period, shares of the company lost 10.7% compared with the industry’s decrease of 15.6%.
Zacks Rank & Stock to Consider
Gentex currently carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the broader auto sector are Ferrari N.V. (RACE - Free Report) , General Motors Company (GM - Free Report) and Fox Factory Holding Corporation (FOXF - Free Report) . Ferrari currently sports a Zacks Rank #1 (Strong Buy) while General Motors and Fox Factory carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ferrari has an expected long-term growth rate of 18.5%. Shares of the company have gained 25.6% in the past three months.
General Motors has an expected long-term growth rate of 8.5%. Share price of the company has increased 10% in the past three months.
Fox Factory has an expected long-term growth rate of 15.1%. Over the past three months, shares of the company have gained 5.2%.
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