GNTX Stock Study (5-20-26)

Posted by Mark on May 22, 2026 at 07:46 | Last modified: May 20, 2026 09:52

I recently did a stock study on Gentex Corp. (GNTX, $22.67). The previous study is here.

M* writes:

     > Gentex was founded in 1974 to produce smoke-detection equipment.
     > The company sold its first glare-control interior mirror in 1982 and
     > its first model using electrochromic technology in 1987. Automotive
     > revenue was about 89% of total revenue in 2025, down from 98% in
     > 2024 due to Voxx acquisition in April 2025. The company is constantly
     > developing new applications for the technology to remain on top.
     > Sales in 2025 totaled about $2.5 billion with 44.8 million mirrors
     > shipped. The unit mix breaks out as 64% interior and 36% exterior vs.
     > 31% exterior in 2019. The company is based in Zeeland, Michigan.

While I don’t consider this to be a high-quality growth company, I do consider it very instructive as a stock study.

Initial data collection reveals some reasons to be tempted by GNTX. M* and CFRA currently rate it five stars. Value Line (VL) is long-term bullish. Not only does it remain in Cy Lynch’s BetterInvesting® Magazine tracking portfolio, he recommended adding to the position just last month (April). It also remains in the Manifest Investing Buttonwood Portfolio (although they have been deliberating about removing it for quite some time).

I believe visual inspection fails. Over the past decade, the medium-size company grows sales and EPS at annualized rates of 4.2% and 3.1%, respectively. These are much less than the upper-single-digit “rule of thumb” we typically like to see. Revenue and EPS are mostly up, straight, and parallel with dips in ’20 and an additional EPS dip in ’22. Pre-tax profit, however, DECREASES 1.7% per year. It decreases in ’18, ’19, ’20, ’22, ’24, and ’25. This is anything but “up, straight, and parallel.”

As mentioned above, for instructive purposes I will finish the SSG. Visual inspection failure means speculative positions only, though, and one is really encouraged to pass on the stock altogether.

Five- (10-year) earnings R^2 is 0.48 (0.46) and VL gives an Earnings Predictability score of 75. Shares outstanding decrease 25.2% (3.2%/year, which might be part of the reason EPS looks relatively healthy compared to pre-tax profit).

Over the past decade, PTPM leads peer and industry averages despite falling from 30.4% to 18.2% (’25) with a last-5-year mean of 20.8%. ROE slightly leads peer and industry averages while ranging from 15.0% in ’25 to 22.8% in ’18 with a last-5-year mean of 17.0% (shareholder equity positive and growing 2.9%/year despite dips in ’18 and ’21). Debt-to-Capital is less than peer and industry averages while decreasing from 8.9% to 0.2% (’25) with a last-5-year mean of 0.0%.

Quick Ratio is 1.3 and Interest Coverage N/A (company is debt-free) per M* who assigns “Narrow” Economic Moat, “Standard” rating for Capital Allocation, and an A grade for Financial Health (per BetterInvesting® website). VL rates the company B++ for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 6.4% and 4.9% for ’26 and ’27 (based on 7 analysts).
• Zacks gives YOY ACE 5.8% and 5.2% for ’26 and ’27, respectively (4 analysts).
• VL projects 5.7% per year from ’25-’30.
• CFRA projects 7.5% YOY and 5.3% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 5.1% per year and projects 5-year annualized 5.7% in Equity Report.

My 4.0% annualized forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 10.1% and 12.1% per year for ’25-’27 and ’25-’28, respectively (based on 11 analysts).
• Nasdaq.com gives ACE 15.4% and 16.4% per year for ’26-’28 and ’26-’29 [4 / 2 / 1 analyst(s) for ’26 / ’28 / ’29].
• Finviz gives 5-year annualized ACE of 11.6% (2).
• LSEG projects LTG of 11.9%.
• YF gives YOY ACE 10.1% and 11.2% for ’26 and ’27, respectively (7).
• Zacks gives YOY ACE 8.3% and 10.7% for ’26 and ’27, respectively (4).
• VL projects 11.4% annualized from ’25-’30.
• CFRA projects 7.5% YOY and 5.3% per year for ’26 and ’25-’27 along with 3-year CAGR of 17.0%.
• M* gives long-term ACE 15.1%/year and projects 14.3% annualized from ’25-’30 in Equity Report.

My 6.0% forecast is well below the long-term-estimate range (mean of five: 12.9%) although still double its historical growth rate. Initial value is ’25 EPS of $1.74/share rather than 2026 Q1 EPS of $1.78 (TTM).

My Forecast High P/E is 16.0. Over the past 10 years, high P/E ranges from 15.7 in ’17 and ’28 to 26.9 in ’22 with a last-5-year mean of 21.8 and last-5-year-mean average P/E of 18.8. I am near bottom of the range (only the 15.7 is less).

My Forecast Low P/E is 10.0. Over the past 10 years, low P/E ranges from 10.9 in ’16 to 20.3 in ’21 with a last-5-year mean of 15.8. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $17.40 is default based on initial value from above: 23.2% less than previous close and 15.1% less than the 52-week low.

Over the past 10 years, Payout Ratio (PR) ranges from 20.4% in ’18 to 40.0% in ’21 with a last-5-year mean of 29.9%. I am forecasting below the range at 20.0%.

These inputs land GNTX in the HOLD zone with a U/D ratio of 2.8. Total Annualized Return (TAR) is 11.7%.

PAR (using Forecast Average—not High—P/E) of 7.5% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with Member Sentiment (MS). Based on 68 studies done in the past 90 days (33 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 5.8%, 9.5%, 19.0, 12.8, and 30.9% respectively. I am lower across the board. VL projects a future average P/E of 16.0 that is greater than MS (15.9) and greater than mine (13.0).

MS high / low EPS are $2.78 / $1.74 versus my $2.33 / $1.74 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $3.05 ($3.53) is greater than both.

MS LSPF of $18.50 implies a Forecast Low P/E of 10.6: less than the above-stated 12.8. MS LSPF is 16.9% less than the default $1.74/share * 12.8 = $22.27 resulting in more conservative zoning. MS LSPF exceeds mine by 6.3%, however.

MOS is robust in the study because my inputs are near or less than historical/analyst/MS averages/ranges. Also supportive of the MOS is MS TAR exceeding mine by 8.5% per year.

Based on the latter, I would normally suspect my study to be overly conservative but given the failing visual inspection and a lingering question I do not. That lingering question: why are analysts expecting the company to quadruple its historical EPS growth going forward? It’s a legacy company (since 1974) with the same CEO since 2018.

With regard to valuation, PEG is 4.0 and 2.0 per M* and my projected P/E, respectively: overvalued on average. Relative Value [(current P/E) / 5-year-mean average P/E] is low at 0.68. “Quick and Dirty” DCF method has stock undervalued by 28% and M* reports stock at a 46% discount (with that 4.0 PEG).

Per U/D, GNTX would be a BUY under $22.40/share were visual inspection acceptable. BetterInvesting® TAR criterion would be met [37.3 / ((13.57 / 100 ) +1 ) ^ 5] ~ $19.70 given a forecast high price ~$37 if visual inspection were to pass.

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