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Gates Industrial
(NYSE:GTES)
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Rating:74Outperform
Price Target:
$32.00
▲(19.00% Upside)
Action:Upgraded
Date:08/18/26
GTES scores 74 primarily on strong earnings-call momentum (raised guidance, record quarter, and booking strength) and solid underlying financial performance (high margins and strong free cash flow). Technicals add support with price above major moving averages and neutral-to-positive momentum, while valuation is the main limiter given a ~19.4 P/E and no dividend yield provided.
Positive Factors
Strong margins and cash generation
High gross and EBITDA margins indicate differentiated engineered products and disciplined cost control. Substantial free cash flow, converting about 84% of TTM net income, supports debt reduction, reinvestment and resilient capital allocation.
Negative Factors
Modest underlying revenue growth
Despite strong margins, the underlying top line has expanded slowly and has shown cyclical weakness. Limited organic growth can constrain operating leverage and makes sustained earnings improvement more dependent on mix, pricing and productivity actions.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong margins and cash generation
High gross and EBITDA margins indicate differentiated engineered products and disciplined cost control. Substantial free cash flow, converting about 84% of TTM net income, supports debt reduction, reinvestment and resilient capital allocation.
Read all positive factors
Gates Industrial Key Performance Indicators (KPIs)
Any
Net Sales By Segment
Breaks down total sales by business segment, providing insight into which areas are driving revenue and how the company is diversifying its income streams.
Breaks down total sales by business segment, providing insight into which areas are driving revenue and how the company is diversifying its income streams.
Data provided by:
The Fly
The FlyGates Industrial (GTES) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.59B
Dividend YieldN/A
Average Volume (3M)1.91M
Price to Earnings (P/E)18.2
Beta (1Y)1.42
Revenue Growth3.34%
EPS Growth80.30%
CountryUS
Employees13,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)1.43
Shares Outstanding253,151,170
10 Day Avg. Volume1,688,263
30 Day Avg. Volume1,909,655
Financial Highlights & Ratios
PEG Ratio0.80
Price to Book (P/B)1.68
Price to Sales (P/S)1.62
P/FCF Ratio13.81
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$33.00Price Target Upside22.72% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)1.67
Revenue Forecast (FY)$3.61B
Gates Industrial Business Overview & Revenue Model
Company Description
Gates Industrial Corporation plc operates worldwide, specializing in the engineering, manufacturing, and sale of sophisticated power transmission and fluid power systems. The company is organized into two main operational units: Power Transmission...
How the Company Makes Money
Gates makes money primarily by selling engineered components and systems for power transmission and fluid power, with revenue largely driven by two product categories: (1) Power Transmission products—such as synchronous/timing belts, V-belts, and ...
Gates Industrial Earnings Call Summary
Earnings Call Date:Jul 31, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 30, 2026
Earnings Call Sentiment Positive
The call presented a clear positive inflection: record Q2 sales, improved margins and EPS, raised full-year guidance, strong regional bookings and targeted secular initiatives (personal mobility and data centers) underpin confidence for a stronger second half. Near-term headwinds remain—Fluid Power margin drag from footprint realignment, ongoing oil/resin cost volatility and some regional softness in South America—plus timing-related incremental dilution from pricing and paced cost-capture. Overall, the favorable operating performance, raised guidance, balance sheet strength and visible booking momentum materially outweigh the transitory and execution-related lowlights.Positive Updates
Order and Booking Momentum
Book-to-bill remained above 1 in Q2 with management citing high-single-digit year-over-year bookings growth in Q2 and similar strength into July, supporting H2 outlook.
Negative Updates
Fluid Power Margin Compression
Fluid Power adjusted EBITDA margin decreased ~120 basis points in Q2, driven by footprint realignment costs and targeted investments into enterprise initiatives; management expects normalization over H2 but this was a material drag in the quarter.
Read all updates
Q2-2026 Updates
Positive
Negative
Order and Booking Momentum
Book-to-bill remained above 1 in Q2 with management citing high-single-digit year-over-year bookings growth in Q2 and similar strength into July, supporting H2 outlook.
Read all positive updates
Company Guidance
Gates raised its 2026 outlook, now targeting full-year core sales growth of 2.5%–4.5% (a 100‑bp midpoint increase), full‑year adjusted EBITDA of $800M–$830M (midpoint +$10M), and adjusted EPS of $1.62–$1.70 (midpoint +$0.06); Q3 revenue is guided to $880M–$920M with core revenue roughly +5.5% at the midpoint and Q3 adjusted EBITDA margin expected to expand 50–90 bps YoY. Management said H2 core growth should be about 6% (vs ~1% in H1), they are on track for second‑half adjusted EBITDA margin of at least 23.5% and expect to be price/cost neutral in the back half, with incremental margins of ~35–40% in Q3 improving to 45%+ in Q4 (and continuing into H1 2027); guidance for capital expenditures and free‑cash‑flow conversion remains unchanged.Gates Industrial Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
64
Positive
Cash Flow
70
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.50B | 3.44B | 3.41B | 3.57B | 3.55B | 3.47B |
| Gross Profit | 1.42B | 1.39B | 1.36B | 1.36B | 1.25B | 1.34B |
| EBITDA | 724.10M | 703.00M | 677.60M | 656.90M | 614.40M | 705.80M |
| Net Income | 363.90M | 251.40M | 194.90M | 232.90M | 220.80M | 297.10M |
Balance Sheet | ||||||
| Total Assets | 7.39B | 7.15B | 6.79B | 7.25B | 7.19B | 7.53B |
| Cash, Cash Equivalents and Short-Term Investments | 823.50M | 812.10M | 682.00M | 720.60M | 581.40M | 660.90M |
| Total Debt | 2.36B | 2.51B | 2.48B | 2.56B | 2.61B | 2.71B |
| Total Liabilities | 3.50B | 3.46B | 3.45B | 3.71B | 3.75B | 4.05B |
| Stockholders Equity | 3.52B | 3.33B | 3.02B | 3.22B | 3.11B | 3.10B |
Cash Flow | ||||||
| Free Cash Flow | 398.00M | 404.90M | 296.50M | 409.60M | 178.80M | 295.40M |
| Operating Cash Flow | 476.60M | 478.10M | 379.60M | 481.00M | 265.80M | 382.40M |
| Investing Cash Flow | -98.80M | -119.00M | -104.40M | -81.80M | -90.70M | -86.00M |
| Financing Cash Flow | -268.50M | -251.10M | -286.70M | -258.30M | -253.10M | -148.60M |
Gates Industrial Technical Analysis
Negative
26.89
Price Trends
27.23
Negative
26.24
Negative
24.82
Positive
Market Momentum
-0.28
Positive
40.69
Neutral
9.22
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GTES, the sentiment is Negative. The current price of 26.89 is below the 20-day moving average (MA) of 27.47, below the 50-day MA of 27.23, and above the 200-day MA of 24.82, indicating a neutral trend. The MACD of -0.28 indicates Positive momentum. The RSI at 40.69 is Neutral, neither overbought nor oversold. The STOCH value of 9.22 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GTES.
Gates Industrial Risk Analysis
Gates Industrial disclosed 49 risk factors in its most recent earnings report. Gates Industrial reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Gates Industrial Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $6.59B | 18.20 | 10.71% | ― | 3.34% | 80.30% | |
72 Outperform | $10.23B | 27.94 | 16.63% | 1.19% | -0.26% | 29.38% | |
69 Neutral | $10.06B | 35.68 | 12.37% | ― | 20.63% | 27.00% | |
68 Neutral | $6.45B | 146.40 | 2.84% | 0.38% | 13.25% | -48.12% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $5.34B | 43.90 | 11.19% | 0.38% | 27.71% | -12.90% | |
59 Neutral | $3.66B | 148.59 | 1.33% | ― | 15.68% | 133.41% |
* Industrials Sector Average
GTES
Gates Industrial
26.67
0.69
2.66%
NPO
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308.73
83.68
37.18%
FLS
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82.80
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52.88%
SPXC
SPX
205.69
13.22
6.87%
CSW
CSW Industrials
323.03
54.10
20.12%
MIR
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14.90
-5.52
-27.03%
Gates Industrial Corporate Events
Business Operations and StrategyDelistings and Listing ChangesShareholder Meetings
Gates Industrial advances Bermuda redomiciliation and share transition
Neutral
Jul 17, 2026
On July 16, 2026, Gates Industrial Corporation plc obtained High Court approval in England and Wales for a statutory scheme of arrangement that will shift the group’s parent holding company to Gates Industrial Corporation Ltd., a Bermuda ent...
Business Operations and StrategyDelistings and Listing ChangesShareholder Meetings
Gates Industrial Shareholders Approve Redomicile to Bermuda
Neutral
Jun 25, 2026
Gates Industrial Corporation said that on June 25, 2026, its shareholders approved a scheme of arrangement to redomicile the company from England and Wales to Bermuda, a move that will see existing investors receive one New Gates share for each ex...
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Gates Industrial Shareholders Endorse Board, Pay and Auditors
Positive
Jun 10, 2026
On June 4, 2026, Gates Industrial Corporation plc held its 2026 annual general meeting of shareholders, where investors approved all resolutions, including the election of eight director nominees and advisory votes endorsing executive officer comp...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.