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Gates Industrial
(NYSE:GTES)
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Rating:64Neutral
Price Target:
$30.00
▲(11.57% Upside)
Action:Reiterated
Date:08/01/26
GTES scores as moderately attractive: solid underlying financial performance and strong cash generation are the main supports, reinforced by a cautiously positive earnings outlook (guidance reaffirmed, improving orders, expected H2 margin recovery). The score is held back by expensive valuation (high P/E) and only moderate technical conviction given limited momentum indicator data and higher volatility.
Positive Factors
Free cash flow conversion
Sustained FCF conversion near 100% indicates high earnings quality and strong internal funding for capex, debt paydown, dividends or tuck‑ins. Over a multi‑quarter horizon this supports balance‑sheet repair, disciplined M&A and shareholder returns without reliance on external financing.
Negative Factors
Moderate leverage sensitivity
Debt levels, while improving, remain material for an industrial cyclical business. If end‑market volumes or margins deteriorate, leverage could constrain capital allocation, force deleveraging steps or increase refinancing risk, limiting strategic flexibility over several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow conversion
Sustained FCF conversion near 100% indicates high earnings quality and strong internal funding for capex, debt paydown, dividends or tuck‑ins. Over a multi‑quarter horizon this supports balance‑sheet repair, disciplined M&A and shareholder returns without reliance on external financing.
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
$7.11B
Dividend YieldN/A
Average Volume (3M)1.91M
Price to Earnings (P/E)53.8
Beta (1Y)1.44
Revenue Growth3.34%
EPS Growth80.30%
CountryUS
Employees13,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)1.43
Shares Outstanding253,999,920
10 Day Avg. Volume1,688,263
30 Day Avg. Volume1,909,655
Financial Highlights & Ratios
PEG Ratio0.71
Price to Book (P/B)1.69
Price to Sales (P/S)1.63
P/FCF Ratio13.89
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
$32.78Price Target Upside21.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)1.66
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:May 01, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Oct 30, 2026
Earnings Call Sentiment Positive
Cautiously positive. The company experienced notable short-term headwinds from a European ERP implementation and calendar timing that pressured Q1 sales and margins, but these were characterized as temporary. Management highlighted improving order trends, book-to-bill above 1, strong free cash flow (101% conversion), improved leverage (1.9x), a credit upgrade, a small strategic tuck-in acquisition, and reiterated full-year guidance while projecting meaningful margin recovery in the back half. Given the balance of transitory operational issues against solid cash generation, improving orders and reaffirmed guidance, the tone of the call and outlook skew positive.Positive Updates
Revenue and Core Sales
Q1 sales of $851 million. Core sales decreased 2.9% year-over-year but management reported improving demand trends (core sales approximated mid-single digits growth in March) and a book-to-bill solidly above 1. Company reiterated full-year guidance.
Negative Updates
ERP Transition Disruption
European ERP conversion caused distribution inefficiencies, higher operating costs (hypercare), and a build of past-due backlog. Company estimated the ERP transition and 2 fewer working days combined represented approximately a 600 basis point headwind to core sales in Q1.
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue and Core Sales
Q1 sales of $851 million. Core sales decreased 2.9% year-over-year but management reported improving demand trends (core sales approximated mid-single digits growth in March) and a book-to-bill solidly above 1. Company reiterated full-year guidance.
Read all positive updates
Company Guidance
Gates reiterated its full‑year 2026 guidance while providing quarter‑level detail: Q1 sales were $851M with adjusted EBITDA $177M (20.8% margin), adjusted gross margin 40.5% and adjusted EPS $0.35, with the European ERP transition plus two fewer working days creating roughly a 600‑bp core‑sales headwind and a $0.07 headwind to adjusted EPS; book‑to‑bill exited the quarter above 1. For Q2 management guides revenue of $905M–$945M (midpoint core growth ~3.5% YoY) and expects adjusted EBITDA margin to be down ~30 bps YoY (midpoint ≈22.2%), noting about 100 bps of remaining near‑term drag from ERP/hypercare and footprint work. They expect the footprint optimization benefits to show in the back half, targeting an adjusted EBITDA margin approaching ~23.5% in H2, and reiterated confidence in achieving full‑year core growth absent further geopolitical escalation; balance‑sheet metrics include 12‑month free cash flow conversion ~101% and net leverage of 1.9x (improved ~0.4 turns YoY). They also announced a Timken Industrial Belt tuck‑in (expected close in Q3) that management estimates could add roughly $5M/month of revenue.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
Positive
26.89
Price Trends
26.88
Positive
25.58
Positive
24.61
Positive
Market Momentum
0.52
Negative
61.69
Neutral
90.76
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 26.89 is below the 20-day moving average (MA) of 26.96, above the 50-day MA of 26.88, and above the 200-day MA of 24.61, indicating a bullish trend. The MACD of 0.52 indicates Negative momentum. The RSI at 61.69 is Neutral, neither overbought nor oversold. The STOCH value of 90.76 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GTES.
Gates Industrial Risk Analysis
Gates Industrial disclosed 41 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $9.66B | 26.39 | 16.63% | 1.19% | -0.26% | 29.38% | |
69 Neutral | $11.00B | 38.06 | 12.67% | ― | 20.63% | 27.00% | |
68 Neutral | $6.63B | 152.39 | 2.84% | 0.38% | 10.21% | -48.98% | |
64 Neutral | $7.11B | 53.81 | 10.70% | ― | 3.34% | 80.30% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $5.20B | 43.39 | 11.19% | 0.38% | 27.71% | -12.90% | |
59 Neutral | $3.73B | 151.31 | 1.33% | ― | 15.68% | 133.41% |
* Industrials Sector Average
GTES
Gates Industrial
29.30
5.16
21.38%
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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.