Gates Industrial (GTES) AI Stock Analysis

• Market Cap: $6.52B
• Dividend Yield: N/A
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): 30.6
• Beta (1Y): 1.41
• Revenue Growth: -4.01%
• EPS Growth: -8.86%
• Country: US
• Employees: 14,100
• Sector: Industrials
• Sector Strength: 94
• Industry: Industrial - Machinery
• EPS (TTM): 0.36
• Shares Outstanding: 257,771,180
• 10 Day Avg. Volume: 1,651,540
• 30 Day Avg. Volume: 1,656,693
• PEG Ratio: -2.69
• Price to Book (P/B): 2.09
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 20.37
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 1.15
• Enterprise Value/Gross Profit: 33.80
• Enterprise Value/Ebitda: 5.77
• 1Y Price Target: $26.00
• Price Target Upside: 2.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 68 Neutral
• Price Target: $27.00 ▲(6.68%Upside)

Gates Industrial's overall stock score is driven by its strong financial health and solid cash flow generation. However, the technical analysis suggests potential caution due to overbought conditions, and the stock's valuation appears stretched with a high P/E ratio. The positive aspects from the earnings call provide some optimism but are offset by ongoing market challenges.

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 leading global manufacturer and provider of power transmission and fluid power solutions. The company operates primarily in the industrial and automotive sectors, offering a diverse range of products such as belts, hoses, and other related components. Gates Industrial is known for its innovation and technological advancements, serving a broad customer base across various industries including construction, agriculture, energy, and transportation.

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 displays solid financial health characterized by strong operating performance and robust cash flow generation. The income statement shows a healthy EBIT margin at 14.49% and strong EBITDA margin at 17.54%, although revenue growth has been slightly declining. The balance sheet reveals a low debt-to-equity ratio of 0.05, indicating minimal leverage and strong equity coverage. Cash flow metrics are favorable, with high operating and free cash flow relative to net income.

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	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.41B	3.57B	3.55B	3.47B	2.79B
Gross Profit	1.36B	1.36B	1.25B	1.34B	1.03B
EBITDA	478.70M	676.30M	620.20M	720.50M	489.70M
Net Income	194.90M	232.90M	220.80M	297.10M	79.40M
Balance Sheet
Total Assets	6.79B	7.25B	7.19B	7.53B	7.43B
Cash, Cash Equivalents and Short-Term Investments	682.00M	720.60M	578.40M	658.20M	521.40M
Total Debt	2.48B	2.56B	2.58B	2.68B	2.82B
Total Liabilities	3.45B	3.71B	3.75B	4.05B	4.24B
Stockholders Equity	3.02B	3.22B	3.11B	3.10B	2.81B
Cash Flow
Free Cash Flow	296.50M	409.60M	178.80M	295.40M	241.60M
Operating Cash Flow	379.60M	481.00M	265.80M	382.40M	309.00M
Investing Cash Flow	-104.40M	-81.80M	-90.70M	-86.00M	-77.50M
Financing Cash Flow	-286.70M	-258.30M	-253.10M	-148.60M	-353.80M

Gates Industrial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 25.31
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 25.31 is above the 20-day moving average (MA) of 24.29, above the 50-day MA of 22.80, and above the 200-day MA of 20.74, indicating a bullish trend. The MACD of 0.69 indicates Positive momentum. The RSI at 70.39 is Negative, neither overbought nor oversold. The STOCH value of 94.13 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	75 Outperform	$4.45B	52.71	5.90%	0.58%	2.92%	―
MWA	75 Outperform	$3.94B	27.48	17.68%	1.06%	10.96%	43.44%
FELE	73 Outperform	$4.26B	24.41	14.11%	1.10%	-1.26%	-4.84%
KAI	73 Outperform	$4.07B	36.66	13.38%	0.38%	6.83%	-1.84%
GTES	68 Neutral	$6.52B	30.65	6.93%	―	-4.01%	-8.86%
Sector *	65 Neutral	$11.14B	15.76	5.26%	2.01%	3.16%	-25.01%
CSW	64 Neutral	$4.76B	33.85	16.19%	0.19%	10.78%	29.12%

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.