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Gentex Corp GNTX

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Morningstar’s Analysis

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Gentex Takes Small Hit From Semiconductor Shortage but Raises 2022 Outlook

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.

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Company Profile

Business Description

Gentex was founded in 1974 to produce smoke-detection equipment. The company sold its first glare-control interior mirror in 1982 and its first model using electrochromic technology in 1987. Automotive revenue is about 98% of total revenue, and the company is constantly developing new applications for the technology to remain on top. Sales from 2020 totaled about $1.7 billion with 38.2 million mirrors shipped. The company is based in Zeeland, Michigan.

600 North Centennial Street
Zeeland, MI, 49464
T +1 616 772-1800
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 5,303