Gentex (GNTX) Rides on Product Strategy Despite Expense Woes

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We issued an updated research report on Gentex CorporationGNTX on Aug 21.

Zeeland, MI-based Gentex is engaged in supplying automatic-dimming rearview mirrors and electronics to the automotive industry. The company's improved product strategy, with better mix and innovative launches, aids its revenue growth momentum. Though Gentex's earnings per share and revenues missed the Zacks Consensus Estimate in second-quarter 2018, both improved year over year.

Over the past six months, shares of Gentex have outperformed the industry it belongs to. Over this time frame, shares of the company have increased 5.8%, whereas the industry declined by 8.5%. However, the Zacks Consensus Estimate for both the current quarter and current year earnings has declined over the past month.

The company strives for long-term growth through product launches, improved product mix and unique technology platforms, while executing operational discipline, designed around shareholder return. It persistently endeavors at to provide unique, value-added solutions for its customers that provide scalable platforms focused on consumers.

However, higher operating expenses are a concern before the company. In the first half of 2018, operating expenses were up around 9% to $90.2 million on a year-over-year basis, mainly owing to higher staffing levels. Moreover, cost escalation due to higher tariff is likely to put pressure on gross margin. Gross margin (including additional tariff costs) outlook for 2018 has been changed from 38-39% to 37.5-38.5%.

Zacks Rank & Key Picks

Gentex currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Fox Factory Holding Corporation FOXF , Honda Motor Co., Ltd. HMC and AB Volvo VLVLY . While Fox Factory sports a Zacks Rank #1 (Strong Buy), both Honda and Volvo carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Fox Factory has an expected long-term growth rate of 16.8%. Over a year, shares of the company have gained 68.4%.

Honda has an expected long-term growth rate of 3%. Shares of the company have risen 9.3% in the past year.

AB Volvo has an expected long-term growth rate of 15%. Over the past two years, shares of the company have gained 57.2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: FOXF , HMC , GNTX , VLVLY

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