Gates Industrial (GTES) AI Stock Analysis

• Market Cap: $6.21B
• Dividend Yield: N/A
• Average Volume (3M): 1.94M
• Price to Earnings (P/E): 31.0
• Beta (1Y): 1.37
• Revenue Growth: -2.67%
• EPS Growth: -17.55%
• Country: US
• Employees: 14,100
• Sector: Industrials
• Sector Strength: 76
• Industry: Industrial - Machinery
• EPS (TTM): 0.39
• Shares Outstanding: 257,584,140
• 10 Day Avg. Volume: 1,929,160
• 30 Day Avg. Volume: 1,939,798
• 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: 1.31
• Enterprise Value/Revenue: 2.39
• Enterprise Value/Gross Profit: 5.90
• Enterprise Value/Ebitda: 13.13
• 1Y Price Target: $28.56
• Price Target Upside: 18.51% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 74 Outperform
• Price Target: $28.00 ▲(16.18% Upside)

Gates Industrial's overall score of 74.1 reflects strong financial performance with robust cash flows and efficient operations as its main strengths. Technical indicators suggest a slightly bullish trend, while the valuation appears stretched. The balanced sentiment from the earnings call underscores growth in certain segments but highlights challenges in others, contributing to a mixed outlook.

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 (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 exhibits a stable financial performance with a consistent gross profit margin of approximately 40.6%. Despite a slight revenue decline of 0.5%, the company maintains strong EBIT and EBITDA margins at 13.8% and 16.9%. The balance sheet is solid with low financial leverage and a robust equity ratio of 45.3%. The cash flow is particularly strong, with a free cash flow growth rate of 7.5% and high cash conversion ratios.

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 2021	Dec 2020
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	618.70M	478.70M	676.30M	620.20M	720.50M	489.70M
Net Income	202.70M	194.90M	232.90M	220.80M	297.10M	79.40M
Balance Sheet
Total Assets	7.22B	6.79B	7.25B	7.19B	7.53B	7.43B
Cash, Cash Equivalents and Short-Term Investments	719.70M	682.00M	720.60M	578.40M	658.20M	521.40M
Total Debt	2.47B	2.51B	2.56B	2.58B	2.68B	2.82B
Total Liabilities	3.61B	3.45B	3.71B	3.75B	4.05B	4.24B
Stockholders Equity	3.27B	3.02B	3.22B	3.11B	3.10B	2.81B
Cash Flow
Free Cash Flow	318.80M	296.50M	409.60M	178.80M	295.40M	241.60M
Operating Cash Flow	417.10M	379.60M	481.00M	265.80M	382.40M	309.00M
Investing Cash Flow	-126.30M	-104.40M	-81.80M	-90.70M	-86.00M	-77.50M
Financing Cash Flow	-162.50M	-286.70M	-258.30M	-253.10M	-148.60M	-353.80M

Gates Industrial Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 24.10
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GTES, the sentiment is Neutral. The current price of 24.1 is below the 20-day moving average (MA) of 24.54, above the 50-day MA of 23.69, and above the 200-day MA of 21.22, indicating a neutral trend. The MACD of 0.14 indicates Positive momentum. The RSI at 48.73 is Neutral, neither overbought nor oversold. The STOCH value of 61.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GTES.

Gates Industrial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FELE	78 Outperform	$4.26B	24.78	14.38%	1.09%	2.20%	-3.74%
MWA	75 Outperform	$4.10B	27.71	17.33%	1.02%	10.19%	20.71%
GTES	74 Outperform	$6.21B	30.98	6.31%	―	-2.67%	-17.55%
KAI	74 Outperform	$4.00B	37.82	12.21%	0.39%	1.74%	-7.64%
CSW	72 Outperform	$4.36B	31.03	15.79%	0.21%	12.27%	19.05%
NPO	71 Outperform	$4.69B	55.79	5.78%	0.55%	4.99%	169.24%
Sector *	58 Neutral	HK$14.00B	5.72	-2.78%	5.72%	2.33%	-57.85%

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.