Investment Thesis
Gentex demonstrates solid profitability and exceptional financial health with fortress-like balance sheet (0.01x debt/equity, $164.8M cash) and strong free cash flow generation ($120M, 17.8% FCF margin). However, net income declined 4.9% YoY despite 9.6% revenue growth, indicating margin compression concerns, and critically low returns on capital (ROE 3.9%, ROA 3.3%) suggest inefficient capital deployment despite $3B in assets.
Strengths
- Revenue growth of 9.6% YoY demonstrates market demand and organic expansion
- Exceptional balance sheet strength with minimal debt (23.1M LT debt), 2.72x current ratio, and 206.1x interest coverage providing financial flexibility
- Strong free cash flow generation ($120M FCF with 17.8% margin) indicates quality earnings and operational efficiency
Risks
- Net income declined 4.9% YoY despite revenue growth of 9.6%, signaling margin compression likely from cost inflation or operational headwinds in automotive supply sector
- Poor capital returns with ROE of 3.9% and ROA of 3.3% indicate inefficient utilization of large asset base ($3B total assets)
- EPS declining 1.1% YoY suggests per-share value erosion despite absolute revenue growth, potentially from share dilution or profitability decline
Key Metrics to Watch
- Operating margin trend (currently 18.3%) to assess whether cost pressures stabilize or continue compressing profitability
- Return on Equity trajectory to determine if management can improve capital efficiency and justify the large balance sheet
- Free cash flow sustainability to confirm cash generation quality amid margin compression
Financial Metrics
Revenue
675.4M
Net Income
98.5M
EPS (Diluted)
$0.46
Free Cash Flow
120.0M
Total Assets
3.0B
Cash
164.8M
Profitability Ratios
Gross Margin
33.8%
Operating Margin
18.3%
Net Margin
14.6%
ROE
3.9%
ROA
3.3%
FCF Margin
17.8%
Balance Sheet & Liquidity
Current Ratio
2.72x
Quick Ratio
1.54x
Debt/Equity
0.01x
Debt/Assets
16.4%
Interest Coverage
206.10x
Long-term Debt
23.1M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T06:35:34.628089 |
Data as of: 2026-03-31 |
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