Gates Industrial (GTES) AI Stock Analysis

• Market Cap: $6.19B
• Dividend Yield: N/A
• Average Volume (3M): 1.50M
• Price to Earnings (P/E): 29.1
• Beta (1Y): 1.41
• Revenue Growth: -4.01%
• EPS Growth: -8.86%
• Country: US
• Employees: 14,100
• Sector: Industrials
• Sector Strength: 86
• Industry: Industrial - Machinery
• EPS (TTM): 0.36
• Shares Outstanding: 257,771,180
• 10 Day Avg. Volume: 1,951,708
• 30 Day Avg. Volume: 1,497,539
• PEG Ratio: 1.53
• Price to Book (P/B): 1.13
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.91
• Enterprise Value/Market Cap: 0.89
• Enterprise Value/Revenue: 0.40
• Enterprise Value/Gross Profit: 3.98
• Enterprise Value/Ebitda: 2.02
• 1Y Price Target: $23.80
• Price Target Upside: -0.87% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 77 Outperform
• Price Target: $25.00 ▲(4.12%Upside)

The overall score reflects Gates Industrial's solid financial health, strong market momentum, and positive outcomes from the recent earnings call. However, the valuation appears stretched, which slightly dampens the overall stock attractiveness.

Positive Factors

Earnings Outlook

Management raised the adjusted EPS forecast, implying higher expectations for earnings performance.

Financial Performance

Gates Industrial Corporation showed a beat driven by firm margins behind productivity initiatives and price/cost leverage.

Market Expansion

GTES secured meaningful new replacement/aftermarket customer to expand its reach.

Negative Factors

Market Challenges

Guidance was lowered for incremental end market weakness in first-fit channels (particularly construction, ag, auto).

Market Trends

Management is pulling forward internal initiatives to take advantage of slower-than-anticipated trends.

Gates Industrial Business Overview & Revenue Model

Company Description

Gates Industrial Corporation plc manufactures and sells engineered power transmission and fluid power solutions worldwide. It operates in two segments, Power Transmission and Fluid Power. The company offers synchronous or asynchronous belts, including V-belts, CVT belts, and Micro-V belts, as well as related components, such as sprockets, pulleys, water pumps, tensioners, or other accessories; solutions for stationary and mobile drives, engine systems, personal mobility, and vertical lifts application platforms; metal drive components; and kits for automotive replacement channels. It also provides fluid power solutions comprising stationary hydraulics, mobile hydraulics, engine systems, and other industrial application platforms; and hydraulics, including hoses, tubing, and fittings, as well as assemblies. The company serves construction, agriculture, energy and resources, automotive, transportation, mobility and recreation, consumer products, and various industrial applications, such as automated manufacturing and logistics systems. It sells its engineered products under the Gates brand. The company offers its products to replacement channel customers, as well as to original equipment manufacturers. Gates Industrial Corporation plc was founded in 1911 and is headquartered in Denver, Colorado.

How the Company Makes Money

Gates Industrial makes money through the sale of its power transmission and fluid power products. Its revenue model is primarily based on manufacturing and distributing a wide range of engineered products and services that are essential for motion and fluid control applications. The company's key revenue streams include the sale of belts, hoses, and other related components to both original equipment manufacturers (OEMs) and the aftermarket. Gates Industrial has a global presence, which allows it to leverage significant scale and reach, enhancing its revenue potential. Additionally, strategic partnerships and a strong focus on research and development contribute to the company's ability to innovate and maintain competitive pricing, further driving its earnings.

Gates Industrial Financial Statement Overview

Summary

Gates Industrial demonstrates solid financial health with strong operating performance and robust cash flow generation. Despite a slight decline in revenue, profitability ratios and cash flow metrics remain favorable. The company's low leverage and strong equity base provide financial stability.

Income Statement

The income statement reveals a mixed performance. The gross profit margin for TTM stands at 40.58%, indicating robust profitability from core operations. However, the net profit margin is relatively low at 6.39%, suggesting significant expenses or finance costs. Revenue growth has been stagnant with a slight decrease, as TTM revenue is marginally lower than the previous annual figure. The EBIT margin is healthy at 14.49%, and the EBITDA margin is strong at 17.54%, reflecting effective cost management and solid operating performance.

Balance Sheet

Gates Industrial's balance sheet shows strong equity financing with an equity ratio of 45.06%. The debt-to-equity ratio is low at 0.05, indicating minimal leverage and reduced financial risk. Return on equity is moderate at 7.00%, reflecting average profitability on shareholders' investments. Overall, the company maintains a solid financial position with low leverage and sufficient equity coverage.

Cash Flow

The cash flow analysis highlights positive trends. Operating cash flow to net income ratio is 1.88, indicating strong cash generation relative to net income. The free cash flow to net income ratio is also high at 1.45, suggesting efficient capital expenditure management. While free cash flow growth is positive at 6.34% compared to the previous year, it is important to monitor the potential impact of any future increase in capital expenditure.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Income Statement
Total Revenue	3.39B	3.41B	3.57B	3.55B	3.47B	2.79B
Gross Profit	1.38B	1.36B	1.36B	1.25B	1.34B	1.03B
EBITDA	652.20M	478.70M	676.30M	620.20M	720.50M	489.70M
Net Income	216.90M	194.90M	232.90M	220.80M	297.10M	79.40M
Balance Sheet
Total Assets	7.04B	6.79B	7.25B	7.19B	7.53B	7.43B
Cash, Cash Equivalents and Short-Term Investments	421.30M	682.00M	720.60M	578.40M	658.20M	521.40M
Total Debt	2.65B	2.48B	2.56B	2.58B	2.68B	2.82B
Total Liabilities	3.80B	3.45B	3.71B	3.75B	4.05B	4.24B
Stockholders Equity	2.94B	3.02B	3.22B	3.11B	3.10B	2.81B
Cash Flow
Free Cash Flow	315.30M	296.50M	409.60M	178.80M	295.40M	241.60M
Operating Cash Flow	407.90M	379.60M	481.00M	265.80M	382.40M	309.00M
Investing Cash Flow	-115.90M	-104.40M	-81.80M	-90.70M	-86.00M	-77.50M
Financing Cash Flow	-162.40M	-286.70M	-258.30M	-253.10M	-148.60M	-353.80M

Gates Industrial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 24.01
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GTES, the sentiment is Positive. The current price of 24.01 is above the 20-day moving average (MA) of 22.46, above the 50-day MA of 21.30, and above the 200-day MA of 20.22, indicating a bullish trend. The MACD of 0.67 indicates Negative momentum. The RSI at 73.90 is Negative, neither overbought nor oversold. The STOCH value of 94.62 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GTES.

Gates Industrial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NPO	78 Outperform	$4.28B	50.63	5.90%	0.61%	2.92%	―
GTES	77 Outperform	$6.19B	29.07	6.93%	―	-4.01%	-8.86%
FELE	75 Outperform	$4.24B	24.31	14.11%	1.14%	-1.26%	-4.84%
MWA	74 Outperform	$3.88B	27.09	17.68%	1.08%	10.96%	43.44%
CSW	74 Outperform	$4.92B	34.98	16.19%	0.33%	10.41%	34.56%
KAI	67 Neutral	$3.88B	35.01	13.38%	0.41%	6.83%	-1.84%
Sector *	58 Neutral	HK$10.50B	4.22	-2.96%	7.40%	3.76%	-51.26%

Gates Industrial Corporate Events

Gates Industrial Shareholders Approve Key Resolutions

On June 5, 2025, Gates Industrial Corporation held its annual general meeting where shareholders approved all resolutions, including the election of nine directors and the ratification of Deloitte & Touche LLP as the independent auditor. The company will conduct annual advisory votes on executive compensation, reflecting shareholder preferences, and has authorized the board to allot equity securities, enhancing its financial flexibility.

The most recent analyst rating on (GTES) stock is a Buy with a $21.00 price target. To see the full list of analyst forecasts on Gates Industrial stock, see the GTES Stock Forecast page.