Gates Industrial Corp Ltd. (GTES) stock analysis

P/E below its 5-year median

Gates Industrial's P/E of 17.8 is below its own 5-year median of 18.6.

P/E below the industry

Gates Industrial's P/E of 17.8 is below the General Industrial Machinery and Equipment median of 26.9.

EV/EBITDA above its 5-year median

Gates Industrial's EV/EBITDA of 11.6 is above its 5-year median of 9.8.

P/B below the industry

Gates Industrial's price-to-book of 1.80 is below the General Industrial Machinery and Equipment median of 2.84.

Trading below fair value

The share price of $25.56 is below our fair value estimate of $30.02.

Margin of safety under 20%

The price is 14.9% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -1.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 7.6% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 55.6% over the last twelve months, against a 5-year average of 25.9% a year.

Growing slower than the industry

Revenue grew 4.0% over the last twelve months; the General Industrial Machinery and Equipment median is 12.4%.

Guidance raised

Gates Industrial raised its Updated 2026 Adjusted EPS outlook on Jul 31, 2026.

Gross margin slipping

Gross margin was 40.3% over the last twelve months, against 40.4% a year earlier.

Return on equity under 15%

Return on equity was 10.6% over the last twelve months and averaged 7.7% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 9.8%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Gates Industrial's return on equity of 10.6% is above the General Industrial Machinery and Equipment median of 9.9%.

Earnings grew over 5 years

Net income grew 25.9% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 10.4% over the last twelve months, against a 5-year average of 6.9%.

Net margin above the industry

Gates Industrial's net margin of 10.4% is above the General Industrial Machinery and Equipment median of 8.0%.

High debt

Debt is 62.4% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 96.5% five years ago to 62.4%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 19.8% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 3.9 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 3.41 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.45; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Gates Industrial has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.