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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Gentex (Nasdaq: GNTX ) were down as much as 11% early this morning after a subpar earnings report but battled back to finish essentially flat.
So what: The company, which makes electro-optical products such as automotive mirrors as well as fire safety gadgets, said EPS fell slightly to $0.29 a share from $0.30 a year ago, and revenue declined by 0.5% to $268.2 million. The results beat EPS projections by a penny but came up short on the top line. Gentex is heavily dependent on the European market, and CEO Fred Bauer said that "European economic conditions could have had a negative impact on product mix." Management guided for flat growth in the fourth quarter and scaled back full-year guidance for certain automotive products.
Now what: When stocks bounce back this quickly after a disappointing earnings report, it generally indicates that the market sees a buying opportunity. Shares of Gentex have fallen nearly 50% over the past year, but this is a market leader with 88% share in some segments, and it makes technical products with high barriers to entry. European weakness may continue to hamper revenue growth in the coming quarters, but as a long-term play, the price looks reasonable at a P/E of 14.5, not to mention a 3.1% dividend yield. Growth of 22% in North American mirror units in the past quarter indicates that there's still plenty of potential upside.
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