Intrinsic value of Gentex Corporation - GNTX

Previous Close

$19.94

  Intrinsic Value

$20.04

stock screener

  Rating & Target

hold

0%

Previous close

$19.94

 
Intrinsic value

$20.04

 
Up/down potential

0%

 
Rating

hold

We calculate the intrinsic value of GNTX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,871
  1,914
  1,963
  2,018
  2,079
  2,146
  2,220
  2,299
  2,384
  2,475
  2,573
  2,678
  2,789
  2,907
  3,032
  3,165
  3,306
  3,455
  3,612
  3,778
  3,953
  4,138
  4,332
  4,537
  4,754
  4,981
  5,220
  5,472
  5,737
  6,016
Variable operating expenses, $m
  1,323
  1,353
  1,386
  1,424
  1,465
  1,511
  1,561
  1,615
  1,673
  1,735
  1,752
  1,823
  1,899
  1,979
  2,065
  2,155
  2,251
  2,352
  2,459
  2,572
  2,691
  2,817
  2,950
  3,089
  3,236
  3,391
  3,554
  3,726
  3,906
  4,096
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,323
  1,353
  1,386
  1,424
  1,465
  1,511
  1,561
  1,615
  1,673
  1,735
  1,752
  1,823
  1,899
  1,979
  2,065
  2,155
  2,251
  2,352
  2,459
  2,572
  2,691
  2,817
  2,950
  3,089
  3,236
  3,391
  3,554
  3,726
  3,906
  4,096
Operating income, $m
  547
  561
  577
  594
  614
  635
  659
  684
  711
  740
  821
  855
  890
  928
  968
  1,010
  1,055
  1,103
  1,153
  1,206
  1,262
  1,321
  1,383
  1,448
  1,517
  1,590
  1,666
  1,746
  1,831
  1,920
EBITDA, $m
  673
  688
  706
  726
  748
  772
  798
  826
  857
  890
  925
  963
  1,003
  1,045
  1,090
  1,138
  1,189
  1,242
  1,299
  1,358
  1,421
  1,488
  1,558
  1,631
  1,709
  1,791
  1,877
  1,967
  2,063
  2,163
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  21
  22
  24
  26
Earnings before tax, $m
  547
  561
  576
  593
  613
  634
  656
  681
  708
  737
  817
  850
  884
  921
  961
  1,002
  1,046
  1,093
  1,142
  1,194
  1,249
  1,307
  1,367
  1,432
  1,499
  1,570
  1,645
  1,724
  1,807
  1,894
Tax expense, $m
  148
  151
  156
  160
  165
  171
  177
  184
  191
  199
  221
  229
  239
  249
  259
  271
  283
  295
  308
  322
  337
  353
  369
  387
  405
  424
  444
  466
  488
  511
Net income, $m
  399
  409
  421
  433
  447
  463
  479
  497
  517
  538
  596
  620
  646
  673
  701
  732
  764
  798
  834
  872
  912
  954
  998
  1,045
  1,094
  1,146
  1,201
  1,259
  1,319
  1,383

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,905
  1,949
  1,999
  2,055
  2,117
  2,186
  2,260
  2,341
  2,428
  2,521
  2,620
  2,727
  2,840
  2,960
  3,088
  3,223
  3,367
  3,518
  3,678
  3,847
  4,026
  4,214
  4,412
  4,621
  4,841
  5,072
  5,316
  5,573
  5,842
  6,126
Adjusted assets (=assets-cash), $m
  1,905
  1,949
  1,999
  2,055
  2,117
  2,186
  2,260
  2,341
  2,428
  2,521
  2,620
  2,727
  2,840
  2,960
  3,088
  3,223
  3,367
  3,518
  3,678
  3,847
  4,026
  4,214
  4,412
  4,621
  4,841
  5,072
  5,316
  5,573
  5,842
  6,126
Revenue / Adjusted assets
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
  0.982
Average production assets, $m
  816
  834
  856
  880
  907
  936
  968
  1,002
  1,039
  1,079
  1,122
  1,167
  1,216
  1,267
  1,322
  1,380
  1,441
  1,506
  1,575
  1,647
  1,724
  1,804
  1,889
  1,978
  2,073
  2,172
  2,276
  2,386
  2,501
  2,623
Working capital, $m
  301
  308
  316
  325
  335
  346
  357
  370
  384
  399
  414
  431
  449
  468
  488
  510
  532
  556
  582
  608
  636
  666
  698
  731
  765
  802
  840
  881
  924
  969
Total debt, $m
  5
  10
  16
  23
  30
  39
  48
  57
  68
  79
  91
  104
  117
  132
  147
  163
  180
  198
  218
  238
  259
  282
  306
  331
  357
  385
  414
  445
  477
  511
Total liabilities, $m
  229
  234
  240
  247
  254
  262
  271
  281
  291
  302
  314
  327
  341
  355
  371
  387
  404
  422
  441
  462
  483
  506
  529
  554
  581
  609
  638
  669
  701
  735
Total equity, $m
  1,676
  1,715
  1,759
  1,808
  1,863
  1,923
  1,989
  2,060
  2,136
  2,218
  2,306
  2,400
  2,499
  2,605
  2,717
  2,837
  2,963
  3,096
  3,237
  3,386
  3,542
  3,708
  3,882
  4,066
  4,260
  4,464
  4,678
  4,904
  5,141
  5,391
Total liabilities and equity, $m
  1,905
  1,949
  1,999
  2,055
  2,117
  2,185
  2,260
  2,341
  2,427
  2,520
  2,620
  2,727
  2,840
  2,960
  3,088
  3,224
  3,367
  3,518
  3,678
  3,848
  4,025
  4,214
  4,411
  4,620
  4,841
  5,073
  5,316
  5,573
  5,842
  6,126
Debt-to-equity ratio
  0.000
  0.010
  0.010
  0.010
  0.020
  0.020
  0.020
  0.030
  0.030
  0.040
  0.040
  0.040
  0.050
  0.050
  0.050
  0.060
  0.060
  0.060
  0.070
  0.070
  0.070
  0.080
  0.080
  0.080
  0.080
  0.090
  0.090
  0.090
  0.090
  0.090
Adjusted equity ratio
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880
  0.880

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  399
  409
  421
  433
  447
  463
  479
  497
  517
  538
  596
  620
  646
  673
  701
  732
  764
  798
  834
  872
  912
  954
  998
  1,045
  1,094
  1,146
  1,201
  1,259
  1,319
  1,383
Depreciation, amort., depletion, $m
  125
  127
  129
  131
  134
  136
  139
  143
  146
  150
  104
  108
  113
  117
  122
  128
  133
  139
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  232
  243
Funds from operations, $m
  525
  536
  550
  564
  581
  599
  619
  640
  663
  687
  700
  728
  758
  790
  824
  859
  897
  937
  980
  1,024
  1,071
  1,121
  1,173
  1,228
  1,286
  1,347
  1,412
  1,480
  1,551
  1,626
Change in working capital, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
Cash from operations, $m
  519
  529
  542
  556
  571
  588
  607
  627
  649
  673
  685
  712
  740
  771
  804
  838
  875
  913
  954
  997
  1,043
  1,091
  1,142
  1,195
  1,252
  1,311
  1,373
  1,439
  1,508
  1,581
Maintenance CAPEX, $m
  -74
  -76
  -77
  -79
  -81
  -84
  -87
  -90
  -93
  -96
  -100
  -104
  -108
  -113
  -117
  -122
  -128
  -133
  -139
  -146
  -153
  -160
  -167
  -175
  -183
  -192
  -201
  -211
  -221
  -232
New CAPEX, $m
  -16
  -19
  -21
  -24
  -27
  -29
  -32
  -34
  -37
  -40
  -43
  -46
  -48
  -52
  -55
  -58
  -61
  -65
  -69
  -72
  -76
  -81
  -85
  -89
  -94
  -99
  -104
  -110
  -116
  -122
Cash from investing activities, $m
  -90
  -95
  -98
  -103
  -108
  -113
  -119
  -124
  -130
  -136
  -143
  -150
  -156
  -165
  -172
  -180
  -189
  -198
  -208
  -218
  -229
  -241
  -252
  -264
  -277
  -291
  -305
  -321
  -337
  -354
Free cash flow, $m
  429
  435
  443
  452
  463
  475
  488
  503
  519
  537
  542
  562
  584
  607
  632
  658
  686
  715
  746
  779
  814
  851
  890
  931
  974
  1,020
  1,068
  1,118
  1,172
  1,228
Issuance/(repayment) of debt, $m
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  32
  34
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  5
  5
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  32
  34
Total cash flow (excl. dividends), $m
  434
  440
  449
  459
  470
  483
  497
  513
  530
  548
  554
  575
  597
  621
  647
  674
  703
  733
  765
  800
  836
  874
  914
  956
  1,001
  1,048
  1,097
  1,149
  1,204
  1,262
Retained Cash Flow (-), $m
  -32
  -39
  -44
  -49
  -55
  -60
  -66
  -71
  -76
  -82
  -88
  -94
  -100
  -106
  -112
  -119
  -126
  -133
  -141
  -149
  -157
  -165
  -174
  -184
  -194
  -204
  -215
  -226
  -237
  -250
Prev. year cash balance distribution, $m
  217
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  619
  402
  405
  410
  416
  423
  432
  442
  453
  466
  466
  481
  498
  515
  534
  555
  577
  600
  625
  651
  679
  708
  739
  772
  807
  844
  883
  923
  967
  1,012
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  593
  368
  352
  337
  322
  307
  292
  276
  260
  244
  221
  205
  189
  173
  157
  141
  125
  110
  96
  83
  70
  59
  48
  39
  31
  25
  19
  14
  11
  8
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Gentex Corporation designs and manufactures automatic-dimming rearview mirrors and electronics for the automotive industry, dimmable aircraft windows for the aviation industry, and commercial smoke alarms and signaling devices for the fire protection industry. The Company's business segment involves designing, developing, manufacturing and marketing interior and exterior automatic-dimming automotive rearview mirrors that utilize electrochromic technology to dim in proportion to the amount of headlight glare from trailing vehicle headlamps. Within this business segment, the Company also designs, develops and manufactures various electronics that are features to the interior and exterior automotive rearview mirrors, as well as interior visors, overhead consoles, and other locations in the vehicle. The Company ships its products to all of the automotive producing regions across the world, which it supports with various sales, engineering and distribution locations across the world.

FINANCIAL RATIOS  of  Gentex Corporation (GNTX)

Valuation Ratios
P/E Ratio 16.5
Price to Sales 3.4
Price to Book 3
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 16.7
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.7%
Cap. Spend. - 3 Yr. Gr. Rate 18%
Financial Strength
Quick Ratio 91
Current Ratio 0
LT Debt to Equity 9.3%
Total Debt to Equity 9.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 15.6%
Ret/ On Assets - 3 Yr. Avg. 15.4%
Return On Total Capital 17.2%
Ret/ On T. Cap. - 3 Yr. Avg. 16.9%
Return On Equity 19.2%
Return On Equity - 3 Yr. Avg. 19.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 39.8%
Gross Margin - 3 Yr. Avg. 39.4%
EBITDA Margin 35.7%
EBITDA Margin - 3 Yr. Avg. 35.6%
Operating Margin 30.5%
Oper. Margin - 3 Yr. Avg. 29.7%
Pre-Tax Margin 30.4%
Pre-Tax Margin - 3 Yr. Avg. 30.2%
Net Profit Margin 20.7%
Net Profit Margin - 3 Yr. Avg. 20.8%
Effective Tax Rate 31.9%
Eff/ Tax Rate - 3 Yr. Avg. 31.2%
Payout Ratio 29%

GNTX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GNTX stock intrinsic value calculation we used $1834 million for the last fiscal year's total revenue generated by Gentex Corporation. The default revenue input number comes from 0001 income statement of Gentex Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GNTX stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for GNTX is calculated based on our internal credit rating of Gentex Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Gentex Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GNTX stock the variable cost ratio is equal to 70.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for GNTX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Gentex Corporation.

Corporate tax rate of 27% is the nominal tax rate for Gentex Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GNTX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GNTX are equal to 43.6%.

Life of production assets of 10.8 years is the average useful life of capital assets used in Gentex Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GNTX is equal to 16.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1861.75166 million for Gentex Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 259.241 million for Gentex Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Gentex Corporation at the current share price and the inputted number of shares is $5.2 billion.

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