Critical Analysis: Gentex (NASDAQ:GNTX) & Ferrari (NYSE:RACE)

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

Institutional & Insider Ownership

86.8% of Gentex shares are held by institutional investors. 0.5% of Gentex shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Ferrari and Gentex”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ferrari	$7.23 billion	11.17	$1.65 billion	$9.90	33.64
Gentex	$2.31 billion	2.18	$404.49 million	$1.70	13.54

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

Volatility & Risk

Ferrari has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Gentex has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Ferrari and Gentex, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ferrari	1	4	9	3	2.82
Gentex	0	6	2	0	2.25

Ferrari currently has a consensus target price of $480.67, indicating a potential upside of 44.34%. Gentex has a consensus target price of $27.86, indicating a potential upside of 21.07%. Given Ferrari’s stronger consensus rating and higher possible upside, equities analysts plainly believe Ferrari is more favorable than Gentex.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ferrari	22.65%	44.20%	16.58%
Gentex	15.61%	15.86%	13.87%

Summary

Ferrari beats Gentex on 13 of the 15 factors compared between the two stocks.

About Ferrari

Ferrari N.V., through its subsidiaries, engages in design, engineering, production, and sale of luxury performance sports cars worldwide. The company offers range, special series, Icona, and supercars; limited edition supercars and one-off cars; and track cars. It also provides racing cars, and spare parts and engines, as well as after sales, repair, maintenance, and restoration services for cars; and licenses its Ferrari brand to various producers and retailers of luxury and lifestyle goods. In addition, the company operates Ferrari museums in Modena and Maranello; Il Cavallino restaurant in Maranello; and theme parks in Abu Dhabi and Spain. Further, it provides direct or indirect finance and leasing services to retail clients and dealers; manages racetracks; develops and sells a range of apparel and accessories; and operates franchised and owned Ferrari stores. The company also sells its products through a network of authorized dealers operating points of sale, as well as through its website. The company was founded in 1947 and is headquartered in Maranello, Italy.

About Gentex

Gentex Corporation designs, develops, manufactures, markets, and supplies digital vision, connected car, dimmable glass, and fire protection products in the United States, Germany, Japan, Mexico, Republic of Korea, and internationally. It operates through Automotive Products and Other segments. The company offers 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, automotive suppliers, and various aftermarket and accessory customers. It also provides variable dimmable windows to aircraft manufacturers and airline operators. In addition, the company offers photoelectric smoke detectors and alarms, electrochemical carbon monoxide alarms and detectors, audible and visual signaling alarms, and bells and speakers used in fire detection systems in office buildings, hotels, and other commercial and residential buildings, as well as researches and develops nanofiber chemical sensing products. It 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. Gentex Corporation was incorporated in 1974 and is headquartered in Zeeland, Michigan.