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After Gentex Corporation's (NASDAQ:GNTX) recent earnings announcement in March 2019, analyst consensus outlook seem pessimistic, with profits predicted to drop by 1.1% next year relative to the past 5-year average growth rate of 11%. With trailing-twelve-month net income at current levels of US$438m, the consensus growth rate suggests that earnings will decline to US$433m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Gentex in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
Over the next three years, it seems the consensus view of the 10 analysts covering GNTX is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of GNTX's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 5.6% based on the most recent earnings level of US$438m to the final forecast of US$502m by 2022. This leads to an EPS of $1.99 in the final year of projections relative to the current EPS of $1.64. However, the near term margins may change heading into 2022, from the current levels of 24% to 23%.
Future outlook is only one aspect when you're building an investment case for a stock. For Gentex, I've put together three essential factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Gentex worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Gentex is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Gentex? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.