Critical Survey: Gentex (GNTX) and Autoliv (ALV)

Gentex (NASDAQ: GNTX) and Autoliv (NYSE:ALV) are both auto/tires/trucks companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Profitability

This table compares Gentex and Autoliv’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gentex 23.27% 19.05% 16.41%
Autoliv 3.87% 13.63% 6.66%

Earnings & Valuation

This table compares Gentex and Autoliv’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gentex $1.79 billion 3.83 $406.79 million $1.28 19.62
Autoliv $10.38 billion 1.33 $427.10 million $6.58 24.02

Autoliv has higher revenue and earnings than Gentex. Gentex is trading at a lower price-to-earnings ratio than Autoliv, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Gentex has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, Autoliv has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Gentex and Autoliv, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gentex 0 4 5 0 2.56
Autoliv 4 10 8 0 2.18

Gentex presently has a consensus target price of $25.67, indicating a potential upside of 2.22%. Autoliv has a consensus target price of $135.63, indicating a potential downside of 14.17%. Given Gentex’s stronger consensus rating and higher probable upside, analysts clearly believe Gentex is more favorable than Autoliv.

Dividends

Gentex pays an annual dividend of $0.44 per share and has a dividend yield of 1.8%. Autoliv pays an annual dividend of $2.48 per share and has a dividend yield of 1.6%. Gentex pays out 34.4% of its earnings in the form of a dividend. Autoliv pays out 37.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Autoliv has increased its dividend for 8 consecutive years. Gentex is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

83.3% of Gentex shares are held by institutional investors. Comparatively, 39.7% of Autoliv shares are held by institutional investors. 0.6% of Gentex shares are held by company insiders. Comparatively, 0.3% of Autoliv shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Gentex beats Autoliv on 10 of the 17 factors compared between the two stocks.

About Gentex

Gentex Corporation provides automatic-dimming and non-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 worldwide. It designs, develops, manufactures, and markets automotive products, including interior and exterior electrochromic automatic-dimming rearview mirrors, automotive electronics, and interior and exterior non-automatic-dimming rearview mirrors with electronic features for automotive passenger cars, light trucks, pick-up trucks, sport utility vehicles, and vans for original equipment manufacturers, tier one automotive mirror manufacturers, and various aftermarket and accessory customers. The company also provides photoelectric smoke detectors and alarms, audible and visual signaling alarms, electrochemical carbon monoxide detectors and alarms, and bells and speakers for use in fire detection systems in office buildings, hotels, and other commercial and residential establishments. Gentex Corporation sells its fire protection products directly, as well as through sales managers and manufacturer representative organizations to fire protection and security product distributors, electrical wholesale houses, and original equipment manufacturers of fire protection systems. The company was founded in 1974 and is headquartered in Zeeland, Michigan.

About Autoliv

Autoliv, Inc., through its subsidiaries, develops, manufactures, and supplies automotive safety systems to the automotive industry worldwide. The company operates through two segments, Passive Safety and Electronics. It offers modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, inflator technologies, battery cable cutters, pedestrian protection systems, and child seats. The company also provides restraint control electronics and crash sensors for deployment of airbags and seatbelt pretensioners; active safety sensors and software for advanced driver assistance systems and autonomous driving solutions; and brake control systems. It primarily serves car manufacturers. The company was founded in 1953 and is headquartered in Stockholm, Sweden.

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