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Gentex (GNTX) Down 4.3% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Gentex (GNTX). Shares have lost about 4.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Gentex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Gentex Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Gentex’s first-quarter 2019 earnings per share were 40 cents, which beat the Zacks Consensus Estimate of 39 cents. In the year-ago quarter, the company’s bottom-line figure was 40 cents. Its net income declined to $104.3 million from $111.2 million in first-quarter 2018.

During the quarter under review, the company reported net sales of $468.6 million, beating the Zacks Consensus Estimate of $463 million. Moreover, the top line increased 1% from net sales of $465.4 million recorded in the first quarter of 2018.

Quarter in Detail

During the reported quarter, the company recorded gross margin of 36.2%, down from the year-ago quarter figure of 37.1%. The gross margin was adversely impacted by approximately 90 basis points due to impacts of tariffs.

During the quarter under review, auto-dimming mirror shipments in the North America market rose 10% to 3.5 million and in the International market, it declined 3% to 7.2 million. In total, it rose 1% year over year to 10.7 million.

Operating expenses during first-quarter 2019 were up 9% to $48 million from $44.1 million in first-quarter 2018.

Share Repurchase

During first-quarter 2019, the company repurchased 4.7 million common shares at an average price of $20.37 per share. As of Mar 31, 2019, Gentex had around 29.1 million shares remaining for repurchase.

Financials

The company had cash and cash equivalents of $221.7 million as of Mar 31, 2019, compared with $217 million as of Dec 31, 2018.

Looking Forward

The company reiterated its guidance for 2019. It expects revenues of $1.83-$1.93 billion and operating expenses of $195-$200 million. Further, gross margin is anticipated to be 36-37% in the current year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Gentex has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Gentex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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