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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

Gates Industrial Corporation plc faced challenges due to muted revenue growth, exposure to cyclical end-markets, and tariffs. Despite beating Q3 earnings estimates with $0.39 per share, the company's top-line guidance was lowered. The industrial products sector witnessed a mixed bag, with some stocks outperforming others. Sequoia Financial Advisors and D.A. Davidson & CO. recently acquired new positions in Gates Industrial, purchasing 11,601 and 13,838 shares, respectively. The company's Q3 net sales rose 3.0% to $855.7 million, with core sales growth of 1.7% (Source: PRNewswire).

1.c. Company Highlights

2. Gates Posts Solid Q3 Results Amidst Muted Demand Environment

Gates reported a core revenue growth of almost 2% in Q3 2025, with the replacement channel growing low single digits, supported by mid-single-digit growth in automotive replacement. The company's adjusted EBITDA margin increased to 22.9%, resulting in record adjusted EBITDA dollars and margin for a third quarter. Earnings per share (EPS) came in at $0.39, beating analyst estimates of $0.38. The company's revenue growth was aided by a return to growth in EMEA, while North America was relatively flat due to weakness in agriculture and commercial on-highway.

Publication Date: Nov -01

📋 Highlights
  • Core Revenue Growth:: Gates reported a 2% core revenue growth in Q3 2025, driven by mid-single-digit automotive replacement growth and stable OEM sales.
  • Adjusted EBITDA Margin:: Achieved a record 22.9% adjusted EBITDA margin in Q3, up from prior periods, with $100 million in debt repayment during the quarter.
  • Share Repurchase Authorization:: Board approved a new $300 million share repurchase program, replacing the prior $100 million remaining authorization, to expire by year-end 2026.
  • Free Cash Flow:: Generated $73 million in free cash flow with 73% conversion to adjusted net income, reducing net leverage to 2.0x by Q3 2025.
  • Strategic Growth Initiatives:: Personal Mobility expected to grow at 30% CAGR (2025–2028), while data center opportunities aim for $100–200 million by 2028, supported by margin expansion targets.

Segment Performance

The company's OEM sales were relatively flat, while the industrial end market was mixed. The automotive replacement and personal mobility business continues to grow nicely, and the data center opportunity set continues to expand. Brooks Mallard noted that the majority of the geographic regions generated core growth in the quarter, with EMEA's return to growth being a highlight.

Cash Flow and Leverage

Gates generated $73 million in free cash flow, representing 73% conversion to adjusted net income. The company's net leverage ratio declined to 2.0x at the end of Q3, an improvement on a year-over-year and sequential basis. The company paid down $100 million of gross debt during the quarter and expects its net leverage to be under 2x at calendar year-end 2025.

Outlook and Valuation

The company is optimistic that demand in the majority of its end markets will be more stable to improving at some point in 2026. With a current P/E ratio of 24.22, the stock appears to be fairly valued. However, the EV/EBITDA ratio of 10.19 suggests that the company's enterprise value is reasonable relative to its earnings. Analysts estimate revenue growth of 4.0% for next year, which could potentially drive the stock higher if the company is able to execute on its growth initiatives.

Growth Initiatives

Gates is optimistic about its growth vectors, such as personal mobility, liquid cooling, and data centers. The company anticipates a 30% year-on-year compound annual growth rate in personal mobility between 2025 and 2028. Ivo Jurek stated that the company is executing well and delivering differentiated operating results, with 18% EPS growth in Q3 and record margins in a muted end market environment.

3. NewsRoom

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Gates Industrial Corporation plc (GTES) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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Gates Industrial: Structural Growth Underway, Yet The Stock Still Feels Cyclical

Nov -29

Source: seekingalpha.com

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Gates Industrial to Participate in the 2025 Goldman Sachs Industrials and Materials Conference

Nov -24

Source: prnewswire.com

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Gates Industrial Corporation PLC (NYSE:GTES) Receives Average Recommendation of “Moderate Buy” from Brokerages

Nov -15

Source: defenseworld.net

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Gates Industrial Corporation plc (GTES) Presents at Baird 55th Annual Global Industrial Conference Transcript

Nov -12

Source: seekingalpha.com

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Gates Strengthens Data Center Portfolio with Launch of Data Master™ Eco

Nov -11

Source: prnewswire.com

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Teacher Retirement System of Texas Has $1.65 Million Stock Holdings in Gates Industrial Corporation PLC $GTES

Nov -05

Source: defenseworld.net

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Gates Industrial to Participate in the Baird 2025 Global Industrial Conference

Nov -04

Source: prnewswire.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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Quality: 6.1

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Gates Industrial

A-Score: 4.7/10

Value: 3.4

Growth: 4.7

Quality: 5.2

Yield: 0.0

Momentum: 8.5

Volatility: 6.3

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Growth: 6.4

Quality: 7.0

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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

22.28$

Current Price

22.28$

Potential

-0.00%

Expected Cash-Flows