Analyst Note| David Whiston, CFA, CPA, CFE |
Gentex’s first-quarter diluted EPS of $0.46 rose 28% year over year but still missed the Refinitiv consensus of $0.49, as did the company’s 7% revenue growth. We are leaving our fair value estimate in place as we consider the earnings miss to be the result of $45 million in lost revenue from the global semiconductor shortage rather than a problem with Gentex’s execution or products. We are encouraged to see management leave 2021 guidance in place but also raise 2022 revenue guidance to 8%-13% growth from 2021’s guided $1.94 billion-$2.02 billion. Previous 2022 guidance was for a 4%-8% increase from 2021. We think this guidance change is reasonable as Gentex’s revenue growth typically outperforms market production growth. In the first quarter, Gentex’s 7% revenue growth easily outperformed a 2% fall in vehicle production across North America, Europe, Japan, and Korea. Furthermore, we think low interest rates and two years of supply chain problems combined with strong consumer demand for new vehicles suggests 2022 could be a strong year.