Valens Research Weekly Equity Idea Highlight for December 5, 2018 – Gentherm Incorporated

This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis.

THRM appears to be heating up with market share and market opportunity growth, and ROA’ recovery, while the market may be misunderstanding their risk from the auto cycle, pointing to potential equity upside

Current market expectations for THRM are overly pessimistic. Markets expect UAFRS adjusted ROA’ to decline to 7% levels going forward, while fundamentals are actually trending positively, pointing to ROA’ forecast to rebound to 13% by 2019. The market appears to be overly concerned about issues around the auto cycle and where total car volumes are trending, without focusing on the unique opportunity Gentherm has to move into and expand their business materially in the volume car market, to drive growth even in a declining marketplace. This opportunity is likely to continue to drive growth, and their innovation is likely to continue to drive strong returns and differentiation going forward.