Gentex Corp. - A Wonderful Business Selling For A Fair Price

Oct. 22, 2012 1:55 PM ETGentex Corporation (GNTX)
Boris Marjanovic profile picture
Boris Marjanovic


Gentex Corporation (NASDAQ:GNTX) was founded in 1974 to produce smoke-detection equipment; however, the company is famous for creating the first commercially successful auto-dimming rear-view and side mirrors, using electrochromic technology. Gentex is continually inventing mirrors with advanced features such as compasses, parking assistance, and hands-free phone capability. However, the two most promising applications are mirrors with rear camera display [RCD] and SmartBeam mirrors, which automatically turn a vehicle's brights on or off, depending on outside conditions.

Gentex has over 700 patents worldwide, with another 300-plus awaiting approval. The company's currently approved patents expire between 2012 and 2029. Gentex also has a dominant 88% market-share, which means that the company has a huge economic moat, which should protect it for a long time.

Growth Prospects

Gentex estimates that of all the vehicles sold annually worldwide, only 23% have an interior auto-dimming mirror and only 6% have at least one exterior auto-dimming mirror. This leaves plenty of room for more growth. There are approximately 76.5 million light vehicles produced annually worldwide. Management estimates that auto-dimming mirrors may penetrate approximately 45% of the market, or 34.4 million light vehicles, over the next decade. Based on average content per vehicle of approximately $100 - this means the company has a $3.4 billion market potential, or more than three times its revenue in 2011.

SmartBeam is mostly sold in Europe, but its safety benefits could expand globally. According to some studies, drivers use their brights optimally only about 25% of the time, so Gentex hopes eventually to make this item standard because there is such a need for it among drivers.

Over the long term, Gentex's technology also could be brought to office and airplane windows. The company, in conjunction with PPG Aerospace, won a contract to supply auto-dimming passenger windows for the Boeing 787 and Beechcraft King

This article was written by

Boris Marjanovic profile picture
Cofounded Uvidyne, which provides financial modeling services to small, medium, and large businesses.

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