GNTX - Gentex Is A Steady Option In An Unsteady Auto Components Sector
2024-07-15 12:00:00 ET
Summary
- Despite global auto sales softening, Gentex's leverage to ADAS mandates and higher-value products like Full Display Mirrors positions it as a more reliable option in the volatile auto components market.
- Management is looking beyond its core mirrors business with new products such as dimmable surfaces, in-cabin air quality monitors, and smart home solutions, broadening its market reach and growth potential.
- I believe that improving the mix could drive an EPS beat in the upcoming Q2 earnings report, but I'm concerned that a weakening auto market could drag down expectations for 2H'24.
- Gentex's worst EBITDA margins are better than most auto suppliers' best years, and while near-term expectations may be at risk, I like the stock for longer-term investment.
These aren't great days for the auto supplier sector. Global auto sales have been softening in most major markets and the timelines for new platform launches, particularly new EV platform launches, are far more jumbled than before. That's tough for powertrain suppliers like BorgWarner Inc. (BWA), but for powertrain-ambivalent suppliers like Gentex Corporation ( GNTX ) with leverage to higher standards for ADAS features, it's not nearly so bad....
Gentex Is A Steady Option In An Unsteady Auto Components Sector