Gentex stock pummeling or a buying opportunity

July 30, 2012
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The second quarter/sixth-month report July 24 at Gentex Corp. contained some disappointing news, which apparently triggered the precipitous drop in the rearview mirror maker’s stock last week — from $21.15 at Monday close to $15.01 on the next day’s close, a drop of more than 29 percent.

Net sales in the second quarter increased by 15 percent over the second quarter last year, and the first six months of this year were up 16 percent over last year’s first half. Gross margins declined slightly, due mainly to annual customer price reductions — automakers are notorious for routinely demanding lower prices from their suppliers.

That bad news came in regard to Gentex’s future sales of the rear camera display rearview mirrors and the mirror-mounted SmartBeam automatic headlight dimming technology. The RCD mirrors have always been sold to automakers that had multiple options on where they install the display. Unfortunately, four automakers have decided to change their primary RCD display location to the center console, not the rearview mirror. Gentex said those decisions will “materially impact” — in a negative way — sales of the RCD mirror in both 2013 and 2014. As for this year, sales of the RCD mirrors are expected to be flat, compared to last year.

The SmartBeam devices are predominantly sold in Europe, but things aren’t too rosy with the continental economy right now, so light vehicle production estimates have been downsized. Now Gentex is saying its shipments of SmartBeam to European automakers will increase this year by 20 to 25 percent. That sounds good, but in its first quarter report in April, Gentex was expecting this year’s SmartBeam sales to be up by 40 to 45 percent above the 1 million shipped to Europe last year.

The pasting Gentex stock took last week just might be a window of opportunity for investors. Stockbroker Dirk Racette at Calder Investment Advisors in Grand Rapids said at the price it was trading last week, he sees Gentex stock as “a good, long-term value. But that doesn’t mean it can’t go lower.”

Racette’s optimism is based on Morningstar’s opinion. Morningstar is a highly regarded Chicago firm that provides independent investment research reports. Racette, a subscriber, noted that Morningstar had reduced its fair market estimated value of Gentex stock a day after the second quarter report — but only from $34 a share to $32. Gentex stock is “extremely undervalued,” stated Morningstar.

Racette also notes that Gentex still only accounts for about 20 percent of the auto-dimming interior rearview mirrors installed in new cars today, and that’s a growing market. That means there is plenty of room for the Zeeland company to grow its sales over the years to come.

Art of the deal

Consider this a sign that miracles can still happen, even in Michigan: To nearly everyone’s surprise, the Michigan Council for Arts and Cultural Affairs revealed last week that it had received an additional $6.1 million in state funding for its fiscal year.

“We are very excited about the support from Gov. Rick Snyder and his administration for this increase in funding. The additional dollars will allow us to add a new capital improvement program intended for the renovation of facilities and equipment,” said MCACA Executive Director John Bracey, just before he passed out. (Just kidding! But that’s what he said.)

The MCACA will be in town Wednesday at the Grand Rapids Ballet, 341 Ellsworth Ave. SW, from 1-3 p.m. to explain how arts groups, nonprofits, schools and municipalities can apply for a share of the funding. Applications will be taken online and will be due Oct. 1, the start of the state’s fiscal year.

Brunch munch

Everyone knows there’s no such thing as a free lunch. But come September, there will be a free brunch downtown as part of the second Hoptoberfest, an annual celebration of the local craft beer industry. In fact, local entrepreneur Mark Sellers, who owns a half-dozen or so downtown nightspots and is the brains behind the event, has expanded Hoptoberfest to a two-day good time and calls the free eats “The World’s Largest Beer Brunch.”

Those who buy a ticket to the fest’s opening day Sept. 15 will get a shot at a seat for the brunch Sept. 16. Sellers plans to serve 2,000 ticketholders at the breakfast buffet that starts at 10 a.m. on a first-come, first-serve basis. Tickets go on sale Aug. 15 at ticketweb.com and the price is still $10.

“Last year’s beer fest drew 3,500 people and received a great response from attendees. This year, we’re building on that success by making it bigger, better, and offering free food, all without raising the price of the ticket,” said Sellers, whose HopCat is a sponsor of the event.

Lunch bunch

Speaking of lunch, now is a good time to go to as many of the 28 downtown restaurants as possible and chew on a sandwich. Grandwich 2012, the city’s signature sandwich competition, is under way and online voting for the 10 best is going on through Aug. 13 at downtowngr.org/sandwich, which is the virtual home of the Downtown Alliance and where you can find the participating restaurants.

Grandwich is the grand creation of Nicole Infante, who presented the idea last year at a 5x5 forum that Rick DeVos started. “The ultimate goals of the competition are to support local business, to put Grand Rapids on the culinary map, and, in general, to taste a lot of different and delicious sandwiches,” said Infante, who truly shows she understands the finer points of life with her last reason.

The people’s choice of top 10 sandwiches will be announced Aug. 14. On Aug. 17, a panel of judges will eat for free and make their choices known at the Grand Rapids Art Museum.

By the way, the same website is accepting votes for a host of downtown bests — things like best new construction, best adaptive reuse of a building and plenty of other things to celebrate. Voting for the best runs through Sept. 7.

Wind farm tours booked

Everybody has heard about commercial wind energy turbines, but seeing one up close is entirely different. The size boggles the mind.

Like it or not, Consumers Energy was facing the prospect of a lot of gawkers drawn to the Lake Winds Energy Park in construction south of Ludington. Twenty-two of the 56 turbines are in place and strikingly visible from the nearby U.S. 31 expressway. The turbine towers are about 15 feet wide at their base and the blades are 160 feet long, are 8 or 9 feet wide at their widest part, and are attached to a hub that is almost 300 feet above the ground. At its highest point in rotation, a blade tip is almost 500 feet above the ground.

The turbines are on private property and strictly off limits, but there is still the risk that gawkers would cause accidents with the heavy construction equipment on the roads, so Consumers decided to offer free mini-bus tours at the Lake Winds site on Thursdays, Fridays and Saturdays, with sign-up through the Ludington/Scottville Area Chamber of Commerce.

Great idea — and so popular that the tours were quickly booked solid all the way through Labor Day. But Dennis Marvin of Consumers said there is the chance more tours will be added. Stay tuned.

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