Latest news with #GTES
Yahoo
a day ago
- Business
- Yahoo
Gates Industrial (GTES) Gets Target Hike as Margin Expansion Confidence Grows
Gates Industrial Chemical Corporation (NYSE:GTES) is one of the 8 cheap beginner stocks to buy right now. Jeffrey Hammond, a KeyBanc analyst, raised his price target for Gates Industrial Chemical Corporation (NYSE:GTES) from $23 to $26 on June 9 while maintaining the stock's rating of Overweight. This decision comes after meetings with investors and meetings with Ivo Jurek, the company's CEO. Gates Industrial is effectively controlling manageable elements to boost earnings without depending on higher volume, even as demand trends are erratic. By innovating and gaining market share, the company is also appears to be growing in its markets. Even in the absence of a notable end-market rebound, Hammond stated he is now more confident that Gates Industrial Chemical Corporation (NYSE:GTES) will be able to meet its margin targets by the end of 2026. This confidence is a result of the company's proven ability to improve profit margins and penetrate more markets. Gates Industrial Chemical Corporation (NYSE:GTES) is a multinational producer of fluid power and power transmission solutions. The company supplies products to original equipment manufacturers (OEMs) as well as replacement channel clients in a variety of industrial and consumer markets. While we acknowledge the potential of GTES as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. Read More: and Disclosure: None.
Yahoo
14-05-2025
- Business
- Yahoo
GTES Q1 Earnings Call: Margin Initiatives, Tariff Mitigation, and Stable Outlook Drive Results
Power transmission and fluid power solutions provider Gates Corporation (NYSE:GTES) reported Q1 CY2025 results exceeding the market's revenue expectations , but sales fell by 1.7% year on year to $847.6 million. Its non-GAAP profit of $0.36 per share was 8.9% above analysts' consensus estimates. Is now the time to buy GTES? Find out in our full research report (it's free). Revenue: $847.6 million vs analyst estimates of $823.4 million (1.7% year-on-year decline, 2.9% beat) Adjusted EPS: $0.36 vs analyst estimates of $0.33 (8.9% beat) Adjusted EBITDA: $187.3 million vs analyst estimates of $180.9 million (22.1% margin, 3.5% beat) Management reiterated its full-year Adjusted EPS guidance of $1.44 at the midpoint EBITDA guidance for the full year is $765 million at the midpoint, above analyst estimates of $757.8 million Operating Margin: 14.7%, up from 13.5% in the same quarter last year Free Cash Flow was -$10.2 million compared to -$39.1 million in the same quarter last year Organic Revenue rose 1.4% year on year (-3.6% in the same quarter last year) Market Capitalization: $5.81 billion Gates Industrial Corporation's first quarter results were supported by positive core sales growth and ongoing improvements in gross margins, as management credited both pricing actions and operational initiatives for offsetting persistent headwinds in agriculture, construction, and energy end markets. CEO Ivo Jurek highlighted the company's ability to deliver margin expansion despite soft demand in certain industrial sectors, pointing to strong performance in personal mobility and automotive replacement segments as key contributors this quarter. Looking ahead, management reaffirmed its full-year guidance, underscoring plans to counter anticipated tariff costs through further price increases and supply chain optimization. Jurek described the current environment as more uncertain due to recent tariff announcements, but expressed confidence in Gates' resilience and flexible manufacturing footprint. The company's focus remains on compressible cost management and executing enterprise-wide initiatives to protect profitability in the face of ongoing macroeconomic and geopolitical challenges. The latest quarter's financial performance was influenced by a combination of stable replacement channel demand, targeted price increases, and margin-focused operational initiatives. Management's ability to navigate tariff headwinds and supply chain complexities emerged as a central theme on the call. Replacement Channel Growth: Automotive replacement sales rose at a high-single-digit rate, providing a buffer against softness in original equipment manufacturer (OEM) and industrial markets. Management noted that replacement demand was supported by market share gains and an aging vehicle fleet. Personal Mobility Recovery: The personal mobility segment—covering products for bikes, e-bikes, and scooters—recorded over 30% growth. Management cited depleted inventory and increasing consumer adoption as drivers, particularly in Europe and Asia, without evidence of pre-buy activity. Operational Initiatives on Margins: Ongoing enterprise-wide initiatives, including implementation of the company's '80-20' productivity program, contributed to gross margin expansion for the fourth consecutive quarter. Management stated that North America is now implementing back-end operational improvements, with similar efforts ramping up in Europe. Tariff Mitigation Strategy: Leadership explained that approximately 75% to 80% of the estimated $50 million tariff impact in 2025 will be offset through price increases, with the remainder mitigated by operational actions. Pricing realization is expected to align with the timing of tariff costs, particularly in the second half of the year. Channel Inventory Discipline: Management emphasized balanced inventory levels in distribution channels and no evidence of pull-forward demand or pre-buy behavior ahead of tariff changes, indicating stable underlying demand and disciplined channel management. Management's outlook for the remainder of the year is shaped by ongoing tariff mitigation efforts, continued cost optimization, and expectations of stable demand in key end markets, despite persistent macroeconomic uncertainty. Tariff Pass-Through Actions: The company plans to offset most of its increased tariff exposure with targeted price increases, primarily impacting the U.S. market, and expects these actions to preserve adjusted EBITDA margins with only minor dilution. Cost Management and Productivity: Ongoing implementation of operational initiatives—including the expansion of the '80-20' program—remains a strategic priority, aiming to further optimize the manufacturing footprint and compressible costs, particularly in regions facing demand softness. Geographic and End-Market Trends: Management is closely monitoring demand trends across North America, Europe, and Asia, with a particular focus on personal mobility and automotive replacement channels. Risks include potential further declines in OEM demand and continued weakness in agriculture and construction markets. Michael Halloran (Baird): Asked about the cadence of price increases to offset tariffs and potential competitive positioning advantages. Management clarified that price realization will match tariff timing, with operational initiatives handling the remainder, and highlighted Gates' local manufacturing as a differentiator. Julian Mitchell (Barclays): Questioned demand outlook for personal mobility and automotive, as well as tariff classification impacts. Management attributed mobility growth to depleted inventories and new customer wins, and clarified minimal tariff exposure for auto OEM due to regional sourcing. Jeffrey Hammond (KeyBanc): Sought detail on the magnitude and timing of price increases and the mix of manufacturing in Mexico. Management stated that price implementation is a Q2 event with financial impact in Q3, and described flexibility to shift production to optimize tariff compliance. Nigel Coe (Wolfe Research): Inquired about geographic concentration of price increases and whether Gates has a unique competitive advantage from its manufacturing footprint. Leadership responded that pricing is driven by supply chain realities, and confirmed Gates' footprint is more regionally integrated than most competitors. Deane Dray (RBC Capital Markets): Asked about channel partner inventory levels and reactions to tariffs. Management emphasized balanced sales in and out of the channel, with no evidence of pre-buying or inventory build-up, and noted ongoing ramp-up with a new channel partner. In the coming quarters, key areas to watch will include (1) the effectiveness of price increases and operational initiatives in fully offsetting tariff impacts, (2) the sustainability of growth in personal mobility and automotive replacement demand, and (3) the pace of gross margin expansion as the '80-20' program extends into Europe and back-end operations. Channel partner stability and execution on supply chain optimization will also be closely monitored as signposts of successful strategy execution. Gates Industrial Corporation currently trades at a forward P/E ratio of 15.5×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). 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Yahoo
14-05-2025
- Business
- Yahoo
Is Gates Industrial Corporation plc (NYSE:GTES) Trading At A 50% Discount?
Using the 2 Stage Free Cash Flow to Equity, Gates Industrial fair value estimate is US$44.96 Gates Industrial is estimated to be 50% undervalued based on current share price of US$22.60 Analyst price target for GTES is US$23.80 which is 47% below our fair value estimate Does the May share price for Gates Industrial Corporation plc (NYSE:GTES) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$343.0m US$456.9m US$546.0m US$613.0m US$670.7m US$720.5m US$763.8m US$802.3m US$837.2m US$869.6m Growth Rate Estimate Source Analyst x3 Analyst x2 Analyst x1 Est @ 12.27% Est @ 9.42% Est @ 7.42% Est @ 6.02% Est @ 5.04% Est @ 4.35% Est @ 3.87% Present Value ($, Millions) Discounted @ 8.2% US$317 US$390 US$431 US$447 US$452 US$448 US$439 US$426 US$411 US$395 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$4.2b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.8%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.2%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$870m× (1 + 2.8%) ÷ (8.2%– 2.8%) = US$16b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$16b÷ ( 1 + 8.2%)10= US$7.4b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$12b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$22.6, the company appears quite good value at a 50% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Gates Industrial as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.2%, which is based on a levered beta of 1.264. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Gates Industrial Strength Debt is well covered by earnings. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow faster than the American market. Good value based on P/E ratio and estimated fair value. Significant insider buying over the past 3 months. Threat Debt is not well covered by operating cash flow. Annual revenue is forecast to grow slower than the American market. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price sitting below the intrinsic value? For Gates Industrial, we've put together three additional items you should further examine: Risks: Every company has them, and we've spotted 1 warning sign for Gates Industrial you should know about. Future Earnings: How does GTES's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
14-05-2025
- Business
- Yahoo
Is Gates Industrial Corporation plc (NYSE:GTES) Trading At A 50% Discount?
Using the 2 Stage Free Cash Flow to Equity, Gates Industrial fair value estimate is US$44.96 Gates Industrial is estimated to be 50% undervalued based on current share price of US$22.60 Analyst price target for GTES is US$23.80 which is 47% below our fair value estimate Does the May share price for Gates Industrial Corporation plc (NYSE:GTES) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$343.0m US$456.9m US$546.0m US$613.0m US$670.7m US$720.5m US$763.8m US$802.3m US$837.2m US$869.6m Growth Rate Estimate Source Analyst x3 Analyst x2 Analyst x1 Est @ 12.27% Est @ 9.42% Est @ 7.42% Est @ 6.02% Est @ 5.04% Est @ 4.35% Est @ 3.87% Present Value ($, Millions) Discounted @ 8.2% US$317 US$390 US$431 US$447 US$452 US$448 US$439 US$426 US$411 US$395 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$4.2b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.8%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.2%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$870m× (1 + 2.8%) ÷ (8.2%– 2.8%) = US$16b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$16b÷ ( 1 + 8.2%)10= US$7.4b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$12b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$22.6, the company appears quite good value at a 50% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Gates Industrial as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.2%, which is based on a levered beta of 1.264. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Gates Industrial Strength Debt is well covered by earnings. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow faster than the American market. Good value based on P/E ratio and estimated fair value. Significant insider buying over the past 3 months. Threat Debt is not well covered by operating cash flow. Annual revenue is forecast to grow slower than the American market. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price sitting below the intrinsic value? For Gates Industrial, we've put together three additional items you should further examine: Risks: Every company has them, and we've spotted 1 warning sign for Gates Industrial you should know about. Future Earnings: How does GTES's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Gates Industrial: Q1 Earnings Snapshot
DENVER (AP) — DENVER (AP) — Gates Industrial Corp. (GTES) on Wednesday reported profit of $62 million in its first quarter. The Denver-based company said it had net income of 24 cents per share. Earnings, adjusted for one-time gains and costs, came to 36 cents per share. The manufacturer of power transmission and fluid power systems posted revenue of $847.6 million in the period. Gates Industrial expects full-year earnings in the range of $1.36 to $1.52 per share. _____ This story was generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on GTES at
