Gates Industrial (GTES) AI Stock Analysis

• Market Cap: $5.55B
• Dividend Yield: N/A
• Average Volume (3M): 2.36M
• Price to Earnings (P/E): 23.6
• Beta (1Y): 1.40
• Revenue Growth: -0.75%
• EPS Growth: 9.22%
• Country: US
• Employees: 14,100
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.39
• Shares Outstanding: 258,280,400
• 10 Day Avg. Volume: 3,300,798
• 30 Day Avg. Volume: 2,358,310
• PEG Ratio: -2.15
• Price to Book (P/B): 1.78
• Price to Sales (P/S): 1.58
• P/FCF Ratio: 18.12
• Enterprise Value/Market Cap: 1.54
• Enterprise Value/Revenue: 3.30
• Enterprise Value/Gross Profit: 8.15
• Enterprise Value/Ebitda: 16.47
• 1Y Price Target: $27.86
• Price Target Upside: 25.89% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 67 Neutral
• Price Target: $24.50 ▲(10.71% Upside)

Gates Industrial's overall stock score is driven by strong financial performance and positive earnings call outcomes. However, technical indicators suggest bearish momentum, and the stock's high valuation relative to peers tempers the overall score.

Positive Factors

Strong Cash Flow Generation

Robust cash flow generation supports operational flexibility and strategic investments, enhancing long-term financial stability.

Operational Efficiency

High operational efficiency indicates effective cost management and competitive positioning, supporting sustainable profitability.

Improved Leverage

Reduced leverage enhances financial flexibility and reduces risk, positioning the company for future growth and resilience.

Negative Factors

Subdued Industrial Demand

Weak demand in key markets like North America and Europe could hinder revenue growth and impact future earnings potential.

Restructuring Costs

Restructuring efforts may lead to short-term margin pressures, affecting profitability and requiring careful cost management.

Lowered Cash Flow Outlook

Reduced cash flow conversion due to restructuring outlays may limit available capital for growth initiatives and shareholder returns.

Gates Industrial Business Overview & Revenue Model

Company Description

Gates Industrial Corporation plc (GTES) is a global leader in the manufacturing of power transmission and fluid power solutions. The company operates primarily in the industrial and automotive sectors, providing a diverse range of products including belts, hoses, and fittings that are essential for various applications in machinery, vehicles, and industrial processes. Gates serves a wide array of markets, including construction, agriculture, energy, and transportation, with a focus on innovation and high-performance solutions that enhance efficiency and reliability.

How the Company Makes Money

Gates Industrial generates revenue through the sale of its core products, which include industrial and automotive belts, hoses, and related accessories. The company's revenue model is primarily based on direct sales to original equipment manufacturers (OEMs), distributors, and end-users across various industries. Key revenue streams include the sale of replacement parts and maintenance products, which are essential for ongoing operations in industrial settings. Additionally, Gates benefits from strategic partnerships with other companies in the automotive and industrial sectors, enhancing its distribution capabilities and market reach. The company also invests in research and development to innovate and expand its product offerings, which can lead to increased sales and market competitiveness.

Gates Industrial Financial Statement Overview

Summary

Gates Industrial demonstrates strong financial performance with robust cash flows and profitability metrics. The company maintains a solid balance sheet with low financial leverage and efficient operations. However, slight concerns about revenue growth persist.

Income Statement

Gates Industrial demonstrates a stable financial performance with a consistent gross profit margin of approximately 40.6% in TTM. The net profit margin has slightly improved to 6.0% over the TTM, indicating effective cost management. However, revenue has slightly declined by 0.5% from the previous year, reflecting potential challenges in sales growth. EBIT and EBITDA margins remain strong at 13.8% and 16.9% respectively, showcasing the company's operational efficiency.

Balance Sheet

The balance sheet of Gates Industrial shows a solid equity position with a debt-to-equity ratio of 0.05, indicating low financial leverage. The return on equity (ROE) stands at 6.2% for TTM, reflecting a moderate return for shareholders. The equity ratio is robust at 45.3%, highlighting a strong capital structure. However, the company must remain cautious about its debt management despite a low debt level in the recent period.

Cash Flow

Cash flow analysis reveals a positive outlook with a free cash flow growth rate of 7.5% over the TTM, underscoring the company's ability to generate cash from its operations. The operating cash flow to net income ratio is strong at 2.06, indicating efficient cash conversion. Moreover, the free cash flow to net income ratio of 1.57 reflects robust cash generation relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2019	Dec 2018
Income Statement
Total Revenue	2.59B	3.41B	3.57B	3.55B	3.09B	3.35B
Gross Profit	1.05B	1.36B	1.36B	1.25B	1.14B	1.33B
EBITDA	518.00M	677.60M	656.90M	614.40M	583.90M	734.50M
Net Income	200.10M	194.90M	232.90M	220.80M	690.10M	245.30M
Balance Sheet
Total Assets	7.15B	6.79B	7.25B	7.19B	7.41B	6.72B
Cash, Cash Equivalents and Short-Term Investments	689.40M	682.00M	720.60M	578.40M	635.30M	423.40M
Total Debt	156.80M	2.51B	2.56B	2.58B	3.07B	3.00B
Total Liabilities	3.43B	3.45B	3.71B	3.75B	4.40B	4.39B
Stockholders Equity	3.37B	3.02B	3.22B	3.11B	2.65B	1.95B
Cash Flow
Free Cash Flow	153.90M	296.50M	409.60M	178.80M	265.80M	130.80M
Operating Cash Flow	208.30M	379.60M	481.00M	265.80M	348.90M	313.50M
Investing Cash Flow	-86.90M	-104.40M	-81.80M	-90.70M	-78.00M	-243.60M
Financing Cash Flow	-134.90M	-286.70M	-258.30M	-253.10M	-59.30M	-198.90M

Gates Industrial Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.13
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: 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 22.13 is below the 20-day moving average (MA) of 24.69, below the 50-day MA of 25.13, and below the 200-day MA of 22.37, indicating a bearish trend. The MACD of -0.81 indicates Positive momentum. The RSI at 26.12 is Positive, neither overbought nor oversold. The STOCH value of 9.69 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GTES.

Gates Industrial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FLS	79 Outperform	$8.84B	20.23	20.97%	1.17%	3.19%	69.89%
SPXC	75 Outperform	$10.64B	45.54	12.76%	―	12.60%	24.02%
CSW	73 Outperform	$3.97B	27.95	13.29%	0.33%	14.87%	15.63%
NPO	72 Outperform	$4.63B	54.05	5.80%	0.54%	4.99%	169.24%
MIR	68 Neutral	$7.46B	249.66	1.58%	―	7.81%	―
GTES	67 Neutral	$5.55B	23.63	7.33%	―	-0.75%	9.22%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Gates Industrial Corporate Events

Gates Industrial’s Q3 2025 Earnings Show Growth and Optimism

Gates Industrial Corporation plc is a global manufacturer specializing in highly engineered power transmission and fluid power solutions, serving a wide range of industrial and consumer markets with products sold in over 130 countries.

Gates Industrial Corp’s Earnings Call Highlights Growth and Challenges

Gates Industrial Corp’s recent earnings call conveyed a sentiment of cautious optimism amidst a challenging macroeconomic landscape. The company demonstrated solid execution with notable improvements in adjusted EBITDA margin and growth in the Personal Mobility segment. However, subdued demand in key markets and significant restructuring plans were also highlighted, which could impact short-term margins. Overall, the sentiment reflects a strategic focus on future growth despite current challenges.

Gates Industrial Reports Q2 2025 Earnings and Raises Outlook

Gates Industrial Corporation plc is a global manufacturer specializing in power transmission and fluid power solutions, serving a diverse range of industries from agriculture to consumer applications across more than 130 countries.

Gates Industrial Corp’s Balanced Earnings Call Insights

Gates Industrial Corp’s recent earnings call presented a balanced sentiment, reflecting both positive strides and existing challenges. The company highlighted strong growth in personal mobility and an optimistic outlook for the data center market. However, it also acknowledged hurdles in the industrial OEM and Fluid Power segments. Despite these challenges, Gates has improved its financial standing with increased guidance and enhanced cash flow, though some sales declines remain a concern.