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Gentex (GNTX) Q3 Earnings Meet, Revenues Miss Estimates

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Gentex (GNTX) Q3 Earnings Meet, Revenues Miss Estimates

Adverse effects of tariffs put pressure on Gentex's (GNTX) gross margin.

Gentex Corporation GNTX reported third-quarter 2018 earnings per share of 42 cents, which came in-line with the Zacks Consensus Estimate. However, the bottom-line figure was higher than the year-ago quarter’s figure of 31 cents per share.

During the quarter under review, the company reported net sales of $460.3 million, missing the Zacks Consensus Estimate of $472 million. However, the top line was higher than net sales of $438.6 million in third-quarter 2017.

When compared with the company’s mid-July forecast of IHS for third-quarter 2018, light-vehicle production in primary markets declined by around 5%, leading to lower-than-expected unit shipments and revenues.

Net income for third-quarter 2018 rose 23.4% to $111.3 million compared with $90.2 million in third-quarter 2017.

Gentex Corporation Price, Consensus and EPS Surprise

 

Gentex Corporation Price, Consensus and EPS Surprise | Gentex Corporation Quote

Quarter in Details

During the reported quarter, the company recorded gross margin of 37.6%, down from the year-ago quarter figure of 39%. The gross margin was adversely impacted by approximately 60 basis points due to effects of tariffs.

The company’s effective tax rate was 14.7%, down from 31% during third-quarter 2017, on account of impacts of the tax planning moves, and Tax Cuts and Jobs Act of 2017.

During the quarter under review, auto-dimming mirror shipments in the North American market rose by 9% to 3.21 million and in International market it rose by 5% to 7.02 million. In total, it rose by 6% year over year to 10.2 million.

Operating expenses during third-quarter 2018 were up 8% to $45.6 million in comparison with operating expenses of $42.2 million in third-quarter 2017, primarily due to increased staffing levels.

Share Repurchase

During third-quarter 2018, the company repurchased 7.5 million common shares at an average price of $22.98 per share. As of Sep 30, 2018, the company had around 12.2 million shares remaining for repurchase.

Financials

Gentex had cash and cash equivalents of $194 million as of Sep 30, 2018, compared with $569.7 million as of Dec 31, 2017.

Currently, Gentex carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. ALSN, AB Volvo VLVLY and Navistar International Corporation NAV. While both Allison Transmission and Volvo sport a Zacks Rank #1 (Strong Buy), Navistar has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have surged 15.5%.

Volvo has an expected long-term growth rate of 15%. Over the past two years, shares of the company have risen 36.4%.

Navistar has an expected long-term growth rate of 5%. Over the past two years, shares of the company have risen 50.9%.

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