Gentex stock takes a hit after earnings disappoint

ZEELAND, MI - Gentex Corp.'s stock price fell 7.4 percent on Friday, July 21, after its second quarter sales and profits fell short of analysts' estimates.

The Zeeland maker of auto-dimming rear view mirrors reported profits of 31 cents per share, short of the consensus estimates of 32 cents per share. Sales of $443.1 million - up 5 percent over last year's second quarter -- also missed Wall Street forecasts of $450.8 million.

Gentex's stock closed at $17.28 per share, down $1.38 per share. The stock briefly plunged more than 9.3 percent after trading began in the wake of the earnings announcement.

Company executives said their gross profit margin was 37.7 percent, down from last year's margin of 39.4 percent in second quarter of 2016.

"The quarter over quarter net decrease in the gross profit margin was the result of annual customer price reductions that were not fully offset by purchasing cost reductions, as well as the company's inability to leverage fixed overhead costs as a result of unfavorable product mix," Gentex said in its earnings release.

"The unfavorable product mix was driven by a higher percentage of base auto-dimming mirror shipments versus advanced feature mirrors when compared to the same period in 2016."

Last week, Gentex became the target of a New York short-selling firm that hoped to benefit from a drop in the company's stock price.

Spruce Point Capital issued a 104-page report in which it accuses Gentex managers of manipulating the company's books, overstating its earnings and capital expenditures, hoarding too much cash and relying on technology that is over-rated and in danger of becoming obsolete.

That report was not addressed in a 45-minute conference call with stock analysts on Friday.

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