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1. Company Snapshot

1.a. 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, including V-belts, CVT belts, and Micro-V belts, as well as related components, such as sprockets, pulleys, water pumps, tensioners, or other accessories; solutions for stationary and mobile drives, engine systems, personal mobility, and vertical lifts application platforms; metal drive components; and kits for automotive replacement channels.


It also provides fluid power solutions comprising stationary hydraulics, mobile hydraulics, engine systems, and other industrial application platforms; and hydraulics, including hoses, tubing, and fittings, as well as assemblies.The company serves construction, agriculture, energy and resources, automotive, transportation, mobility and recreation, consumer products, and various industrial applications, such as automated manufacturing and logistics systems.It sells its engineered products under the Gates brand.


The company offers its products to replacement channel customers, as well as to original equipment manufacturers.Gates Industrial Corporation plc was founded in 1911 and is headquartered in Denver, Colorado.

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1.b. Last Insights on GTES

The recent 3-month performance of Gates Industrial Corporation plc was driven by several positive factors. The company's Q4 2025 earnings and revenue surpassed estimates, with net sales of $856.2 million, up 3.2% compared to the prior-year period, and adjusted net income per diluted share of $0.38. Additionally, the company received an average recommendation of "Moderate Buy" from twelve brokerages, with six research analysts issuing a buy recommendation and six holding a hold recommendation. Furthermore, the company's strong financial performance and growth prospects led to a new 52-week high, with the stock trading as high as $27.38.

1.c. Company Highlights

2. Gates Industrial Strengthens Position with Strategic Initiatives

Gates delivered a solid performance in 2025, with nearly 1% core growth, outpacing its end markets, many of which were in contraction. The company's adjusted EBITDA dollars reached an all-time record, and adjusted EPS grew 9% to a record $1.52, meeting the top end of guidance. The personal mobility business was a significant growth driver, exceeding 25% core growth in 2025, while the data center business grew four times compared to 2024. The company's net leverage ratio improved to 1.85x at year-end 2025, and it returned capital to shareholders through share repurchases, buying back over $100 million of shares in the fourth quarter.

Publication Date: Feb -18

📋 Highlights
  • Core Growth Outperformance:: Gates achieved nearly 1% core growth in 2025 despite contracting end markets, driven by 25%+ growth in personal mobility and 4x growth in data center business year-over-year.
  • Financial Strength:: Net leverage ratio reduced to 1.85x by year-end 2025, with $800 million cash on balance sheet and a credit rating upgrade to BB (S&P). Free cash flow conversion hit 92% for 2025.
  • 2026 Guidance:: Core sales growth projected at 1–4%, adjusted EBITDA $775–835 million, and adjusted EPS of $1.52–$1.68 (5% midpoint growth). Q1 2026 faces 100 bps headwind from ERP implementation.
  • Strategic Capital Allocation:: Aggressive $100+ million share buybacks in Q4 2025 and robust free cash flow generation ($238% conversion in Q4) provide flexibility for M&A and organic growth in high-growth areas like data centers ($100–200 million target by 2028).
  • Market Recovery Signals:: Book-to-bill ratio above 1x in late 2025, sustained January order trends, and double-digit growth in EMEA’s industrial markets (5.8% Q4 core sales growth) signal cautious optimism for 2026 industrial demand recovery.

Regional Performance

The company's regional performance varied, with North America experiencing a 2.5% decline in core sales in Q4, while EMEA saw a 5.8% growth in core sales. Industrial markets in EMEA are beginning to recover, with construction, agriculture, and personal mobility showing double-digit growth. According to L. Brooks Mallard, the company's operating performance contributed $0.03 of benefit to adjusted EPS, and foreign exchange related to favorable currency translation represented $0.01 of improvement.

Guidance and Outlook

Gates expects its core sales to grow between 1% to 4% in 2026, with adjusted EBITDA in the range of $775 million to $835 million. The company anticipates most of its end markets to grow in 2026, with improved demand dynamics in industrial off-highway and diversified industrial end markets. The data center exposure business is expected to grow multiples of 2025, with a target of $100 to $200 million by 2028.

Valuation and Metrics

With a P/E Ratio of 27.88 and an EV/EBITDA of 12.34, the market is pricing in a certain level of growth for Gates. The company's ROE is 7.69%, and ROIC is 6.2%, indicating a decent return on equity and invested capital. The Net Debt / EBITDA ratio is 2.39, which is relatively high, but the company has made progress in reducing its net leverage ratio. The Free Cash Flow Yield is 5.51%, which is attractive. Analysts estimate next year's revenue growth at 4.2%, which is slightly above the company's guidance.

Q4 Earnings Performance

The company's Q4 adjusted EPS came out at $0.38, beating estimates of $0.37. This was a positive surprise, and the company's guidance for 2026 is also in line with expectations. The company's ability to generate cash and reduce its net leverage ratio is a positive sign, and its strategic initiatives are expected to drive growth in the coming years.

3. NewsRoom

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Gates Industrial Corporation PLC $GTES Stock Holdings Decreased by Channing Capital Management LLC

Feb -22

Source: defenseworld.net

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Gates Industrial Corporation plc (GTES) Presents at Barclays 43rd Annual Industrial Select Conference Transcript

Feb -19

Source: seekingalpha.com

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Gates Industrial Corporation plc (GTES) Presents at Citi's Global Industrial Tech & Mobility Conference 2026 Transcript

Feb -18

Source: seekingalpha.com

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The London Company Small Cap  Q4 2025 Performance And Trades

Feb -17

Source: seekingalpha.com

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66,324 Shares in Gates Industrial Corporation PLC $GTES Acquired by Caprock Group LLC

Feb -14

Source: defenseworld.net

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Gates Industrial (NYSE:GTES) Sets New 52-Week High Following Earnings Beat

Feb -13

Source: defenseworld.net

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Gates Industrial Corporation plc (GTES) Q4 2025 Earnings Call Transcript

Feb -12

Source: seekingalpha.com

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Gates Industrial (GTES) Q4 Earnings and Revenues Surpass Estimates

Feb -12

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.62%)

6. Segments

Power Transmission

Expected Growth: 2.5%

Gates Industrial's Power Transmission segment growth of 2.5% is driven by increasing demand for energy-efficient solutions, rising industrial automation, and growing adoption of renewable energy sources. Additionally, the company's focus on innovation, expanding product portfolio, and strategic acquisitions are contributing to its growth momentum.

Fluid Power

Expected Growth: 2.8%

Gates Industrial's Fluid Power segment growth of 2.8% is driven by increasing demand for hydraulic and pneumatic systems in industrial automation, construction, and agriculture. Additionally, the company's focus on innovation, such as its patented materials and manufacturing processes, has led to market share gains and pricing power.

7. Detailed Products

Power Transmission

Gates Industrial Corporation plc provides a range of power transmission products, including belts, hoses, and hydraulics, designed to optimize performance and efficiency in various industrial applications.

Fluid Power

Gates Industrial Corporation plc offers a variety of fluid power products, including hydraulic and pneumatic hoses, fittings, and adapters, designed to meet the demands of heavy-duty industrial applications.

Process and Specialty

Gates Industrial Corporation plc provides a range of process and specialty products, including hoses, fittings, and adapters, designed for use in chemical processing, oil and gas, and other specialized industries.

Engineered Products

Gates Industrial Corporation plc offers a range of engineered products, including custom-designed belts, hoses, and assemblies, designed to meet specific customer requirements.

8. Gates Industrial Corporation plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Gates Industrial Corporation plc is moderate due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for Gates Industrial Corporation plc is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Gates Industrial Corporation plc is moderate due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Gates Industrial Corporation plc is high due to the low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Gates Industrial Corporation plc is high due to the presence of several established players in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 44.31%
Debt Cost 6.68%
Equity Weight 55.69%
Equity Cost 11.67%
WACC 9.46%
Leverage 79.56%

11. Quality Control: Gates Industrial Corporation plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Value: 2.1

Growth: 5.2

Quality: 8.5

Yield: 2.0

Momentum: 4.5

Volatility: 10.0

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A-Score: 5.4/10

Value: 4.0

Growth: 6.9

Quality: 7.3

Yield: 2.0

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A-Score: 5.3/10

Value: 3.3

Growth: 6.8

Quality: 6.6

Yield: 2.0

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Gates Industrial

A-Score: 4.9/10

Value: 5.5

Growth: 4.7

Quality: 6.6

Yield: 0.0

Momentum: 6.0

Volatility: 6.3

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A-Score: 4.0/10

Value: 2.7

Growth: 6.4

Quality: 7.0

Yield: 0.0

Momentum: 1.5

Volatility: 6.3

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Middleby

A-Score: 3.8/10

Value: 5.0

Growth: 6.1

Quality: 2.8

Yield: 0.0

Momentum: 3.5

Volatility: 5.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.45$

Current Price

27.45$

Potential

-0.00%

Expected Cash-Flows