GENTEX CORP. Sees 1997 Fourth Quarter Earnings Exceeding Analysts' Estimates
Dec. 15, 1997, Gentex Corp. (Nasdaq:GNTX - news) said it expects to report net income for the fourth quarter of 1997 of about $0.28 to $0.30, exceeding analyst estimates' of $0.25 per share.
For the fourth quarter of 1996, the company reported net income of $7,060,000, or $0.20 per share, on net sales of $37,330,000.
GNTX said the higher than expected net income is a result of higher than expected automotive unit shipments, allowing the company to spread its fixed overhead costs over a greater number of units, and increased yields on the company's newest exterior mirror sub-assemblies.
The company said it estimates that automotive unit shipments in calendar 1998 could increase by about 25% to 30% to the range of 5,000,000, compared with about 3,800,000 units the company expects to ship in 1997.
***************************
This is extremely good news. The reasons they are beating estimates is what is important here. Higher sales and better yields can result in earnings momentum that lasts for quite some time. This is the fuel for upwards earnings revisions.
If they bring in $0.29 this quarter and expectations for next year are boosted 5% to $1.20, we'll be selling at 24 times trailing and 19 times expected earnings. Furthermore, the 1.20 would represents a 23% increase from 1997. A company with sales growth of 25-30%, increasing yields and improving economies of scale should be able to do even better than that.
A move to 27 would break us out of the 18-26 range we've been in for the past 18 months and could give us the momentum we need to move higher. The move to 27 could come in January given a couple positive revisions and a January effect bounce.
WEM |
