Gates Industrial Corp Plc (GTES)
NYSE:GTES
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Gates Industrial
(NYSE:GTES)
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Rating:69Neutral
Price Target:
$24.00
▲(8.55% Upside)
Action:ReiteratedDate:02/14/26
GTES scores highest on financial performance, supported by improving margins and strong, consistent free cash flow, reinforced by cautiously positive 2026 guidance and ongoing deleveraging. The score is tempered by an extended technical setup (overbought signals) and a relatively expensive valuation (P/E ~29) without a dividend yield.
Positive Factors
Free Cash Flow Strength
Gates shows durable cash-generation capacity with >$400M FCF in 2023 and 2025 and management guiding 90%+ FCF conversion for 2026. High, repeatable FCF supports deleveraging, bolt-on M&A optionality, share repurchases and sustaining capex, improving financial flexibility over the medium term.
Negative Factors
Material Absolute Debt Load
Although leverage metrics have improved (net leverage ~1.85x YE2025), the company still carries >$2.3B of debt. The sizeable absolute debt balance increases sensitivity to cyclical revenue declines and rising rates, limiting capital allocation flexibility and making sustained deleveraging a multi-quarter objective.
Read all positive and negative factors
Positive Factors
Negative Factors
Free Cash Flow Strength
Gates shows durable cash-generation capacity with >$400M FCF in 2023 and 2025 and management guiding 90%+ FCF conversion for 2026. High, repeatable FCF supports deleveraging, bolt-on M&A optionality, share repurchases and sustaining capex, improving financial flexibility over the medium term.
Read all positive factors
Gates Industrial (GTES) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.61B
Dividend YieldN/A
Average Volume (3M)2.46M
Price to Earnings (P/E)22.4
Beta (1Y)1.38
Revenue Growth-0.75%
EPS Growth9.22%
CountryUS
Employees14,100
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.38
Shares Outstanding253,855,700
10 Day Avg. Volume2,685,749
30 Day Avg. Volume2,461,436
Financial Highlights & Ratios
PEG Ratio0.73
Price to Book (P/B)1.69
Price to Sales (P/S)1.63
P/FCF Ratio13.89
Enterprise Value/Market Cap1.32
Enterprise Value/Revenue2.15
Enterprise Value/Gross Profit5.33
Enterprise Value/Ebitda10.44
Forecast
1Y Price Target
$31.25Price Target Upside41.34% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)1.61
Revenue Forecast (FY)$3.57B
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, inclu...
How the Company Makes Money
Gates makes money primarily by selling engineered components in two main product categories: (1) Power Transmission and (2) Fluid Power. Revenue is generated through a mix of OEM sales (supplying components to manufacturers for installation in new...
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 Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call presents a broadly positive operational and financial picture — record adjusted EBITDA and EPS, strong cash generation, lower leverage, meaningful growth in high-potential verticals (personal mobility and data center), and return of capital to shareholders. However, near-term execution risks temper enthusiasm: ERP implementation and footprint optimization will weigh on Q1 and first-half margins and revenue (including a two-business-day calendar headwind), aftermarket destocking and automotive OEM softness create regional and channel pressures, and some restructuring costs are front-loaded. Management frames 2026 as a cautious, constructive year with structural improvements that underpin confidence in medium-term margin expansion and potential M&A optionality.Positive Updates
Record adjusted EPS and EBITDA
Adjusted EPS of $1.52 for FY2025, up 9% year-over-year and the top end of guidance; company achieved record adjusted EBITDA dollars and near-record adjusted EBITDA margins.
Negative Updates
ERP transition and implementation costs
ERP transition (Europe) and related inefficiencies are expected to drive incremental costs of approximately $30–$35 million (all-in) and create about a 100 basis point drag on adjusted EBITDA margin for 2026; Q1 2026 especially impacted by ERP inefficiencies.
Read all updates
Q4-2025 Updates
Positive
Negative
Record adjusted EPS and EBITDA
Adjusted EPS of $1.52 for FY2025, up 9% year-over-year and the top end of guidance; company achieved record adjusted EBITDA dollars and near-record adjusted EBITDA margins.
Read all positive updates
Company Guidance
Gates guided 2026 core sales growth of 1%–4%, adjusted EBITDA of $775M–$835M (midpoint implying a slight margin improvement) and adjusted EPS of $1.52–$1.68 (midpoint ≈ +5% vs. 2025) assuming no incremental repurchases (≈$194M authorization remaining); management budgeted $120M of CapEx, expects >90% free‑cash‑flow conversion despite above‑average restructuring, and flagged a ~100‑bp FY drag to adjusted EBITDA margin from ERP and footprint actions (total ERP/transition costs ~$30–$35M, roughly $20M hitting EBITDA in H1 and $10–$15M add‑backs), with footprint optimization expected to add ~ $10M of adjusted EBITDA in H2 (and another ~$10M in 2027). Q1 revenue was guided to $845M–$875M (core -2% to -2.5% at the midpoint, including a ~500‑bp headwind from two fewer business days plus ERP inefficiencies) and Q1 adjusted EBITDA margin is expected to be down ~140 bps at the midpoint; FX is expected to provide ~ $0.04/ share of EPS benefit (≈125 bps translation benefit full year, weighted to H1), operating performance to contribute ≈ $0.03/share, and tax/interest/share‑count/other ≈ $0.01/share. Net leverage was 1.85x at year‑end 2025 with >$800M cash on the balance sheet.Gates Industrial Financial Statement Overview
Summary
Income Statement
73
Positive
Balance Sheet
66
Positive
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.44B | 3.41B | 3.57B | 3.55B | 3.47B |
| Gross Profit | 1.39B | 1.36B | 1.36B | 1.25B | 1.34B |
| EBITDA | 742.10M | 677.60M | 656.90M | 614.40M | 705.80M |
| Net Income | 251.40M | 194.90M | 232.90M | 220.80M | 297.10M |
Balance Sheet | |||||
| Total Assets | 7.15B | 6.79B | 7.25B | 7.19B | 7.53B |
| Cash, Cash Equivalents and Short-Term Investments | 812.10M | 682.00M | 720.60M | 581.40M | 660.90M |
| Total Debt | 2.51B | 2.48B | 2.56B | 2.61B | 2.71B |
| Total Liabilities | 3.46B | 3.45B | 3.71B | 3.75B | 4.05B |
| Stockholders Equity | 3.33B | 3.02B | 3.22B | 3.11B | 3.10B |
Cash Flow | |||||
| Free Cash Flow | 404.90M | 296.50M | 409.60M | 178.80M | 295.40M |
| Operating Cash Flow | 478.10M | 379.60M | 481.00M | 265.80M | 382.40M |
| Investing Cash Flow | -119.00M | -104.40M | -81.80M | -90.70M | -86.00M |
| Financing Cash Flow | -251.10M | -286.70M | -258.30M | -253.10M | -148.60M |
Gates Industrial Technical Analysis
Negative
22.11
Price Trends
24.75
Negative
23.39
Negative
23.99
Negative
Market Momentum
-0.81
Positive
37.02
Neutral
60.63
Neutral
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 22.11 is below the 20-day moving average (MA) of 23.74, below the 50-day MA of 24.75, and below the 200-day MA of 23.99, indicating a bearish trend. The MACD of -0.81 indicates Positive momentum. The RSI at 37.02 is Neutral, neither overbought nor oversold. The STOCH value of 60.63 is Neutral, 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 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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $9.98B | 30.59 | 13.29% | ― | 12.60% | 24.02% | |
71 Outperform | $5.26B | 111.03 | 5.80% | 0.56% | 6.44% | 101.24% | |
69 Neutral | $5.61B | 22.36 | 7.69% | ― | -0.75% | 9.22% | |
66 Neutral | $9.18B | 26.05 | 15.81% | 1.17% | 3.19% | 69.89% | |
66 Neutral | $4.35B | 118.57 | 11.59% | 0.26% | 14.87% | 15.63% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $4.48B | 82.72 | 1.73% | ― | 7.81% | ― |
* Industrials Sector Average
GTES
Gates Industrial
22.11
3.70
20.10%
NPO
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FLS
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SPXC
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200.00
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55.30%
CSW
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263.91
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MIR
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23.38%
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.