Financial Contrast: Gentex (GNTX) and Allison Transmission (ALSN)

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Gentex and Allison Transmission, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gentex 0 5 2 0 2.29
Allison Transmission 2 4 3 0 2.11

Gentex currently has a consensus target price of $21.73, suggesting a potential downside of 7.10%. Allison Transmission has a consensus target price of $47.88, suggesting a potential upside of 1.04%. Given Allison Transmission’s higher probable upside, analysts plainly believe Allison Transmission is more favorable than Gentex.

Earnings and Valuation

This table compares Gentex and Allison Transmission’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gentex $1.83 billion 3.28 $437.88 million $1.62 14.44
Allison Transmission $2.71 billion 2.19 $639.00 million $4.78 9.91

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

Institutional & Insider Ownership

85.5% of Gentex shares are owned by institutional investors. 0.4% of Gentex shares are owned by company insiders. Comparatively, 9.0% of Allison Transmission shares are owned 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.

Risk & Volatility

Gentex has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Allison Transmission has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Dividends

Gentex pays an annual dividend of $0.46 per share and has a dividend yield of 2.0%. Allison Transmission pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. Gentex pays out 28.4% of its earnings in the form of a dividend. Allison Transmission pays out 12.6% 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. Gentex has raised its dividend for 8 consecutive years. Gentex is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Gentex 23.45% 23.03% 20.41%
Allison Transmission 24.04% 97.36% 15.34%

Summary

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

About Gentex

Gentex Corporation provides digital vision, connected car, dimmable glass, and fire protection products worldwide. It designs, develops, manufactures, and markets automotive products, including interior and exterior electrochromic automatic-dimming rearview mirrors, automotive electronics, and non-automatic-dimming rearview mirrors 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 manufactures and sells variable dimmable windows to aircraft manufacturers and airline operators. In addition, it provides photoelectric smoke detectors and alarms, electrochemical carbon monoxide detectors and alarms, audible and visual signaling 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 Allison Transmission

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. defense vehicles worldwide. It offers 12 transmission product lines for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school, transit, and hybrid-transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. The company markets its transmissions under Allison Transmission brand name; and remanufactured transmissions under ReTran brand name. It also sells branded replacement parts, support equipment, and other products necessary to service the installed base of vehicles utilizing its transmissions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. As of February 28, 2019, the company served customers through an independent network of approximately 1,400 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc. Allison Transmission Holdings, Inc. was founded in 1915 and is headquartered in Indianapolis, Indiana.

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