Latest news with #GatesIndustrial
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
Business Insider
12-05-2025
- Business
- Business Insider
Analysts Offer Insights on Industrial Goods Companies: Hub Group (HUBG) and Gates Industrial (GTES)
Analysts have been eager to weigh in on the Industrial Goods sector with new ratings on Hub Group (HUBG – Research Report) and Gates Industrial (GTES – Research Report). Protect Your Portfolio Against Market Uncertainty Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. Hub Group (HUBG) Barclays analyst Brandon Oglenski maintained a Hold rating on Hub Group on May 9 and set a price target of $40.00. The company's shares closed last Friday at $33.23. According to Oglenski is a 4-star analyst with an average return of 2.5% and a 46.9% success rate. Oglenski covers the Industrial Goods sector, focusing on stocks such as Sun Country Airlines Holdings, Canadian Pacific Kansas City, and Canadian National Railway. Hub Group has an analyst consensus of Hold, with a price target consensus of $40.09, representing a 24.3% upside. In a report issued on May 9, Evercore ISI also maintained a Hold rating on the stock with a $35.00 price target. Barclays analyst Julian Mitchell maintained a Buy rating on Gates Industrial on May 9 and set a price target of $23.00. The company's shares closed last Friday at $20.73. According to Mitchell is a 5-star analyst with an average return of 7.4% and a 56.5% success rate. Mitchell covers the Industrial Goods sector, focusing on stocks such as Emerson Electric Company, Honeywell International, and Stanley Black & Decker. The word on The Street in general, suggests a Strong Buy analyst consensus rating for Gates Industrial with a $23.00 average price target, which is a 10.8% upside from current levels. In a report issued on April 30, RBC Capital also maintained a Buy rating on the stock with a $23.00 price target.
Yahoo
14-04-2025
- Business
- Yahoo
Gates Industrial Announces Time Change for First-Quarter 2025 Conference Call
DENVER, April 14, 2025 /PRNewswire/ -- Gates Industrial Corporation plc (NYSE:GTES) today announced that it has changed the time of its first-quarter 2025 webcast and conference call from 10 a.m. Eastern time to 9 a.m. Eastern time on Wednesday, April 30, 2025. The access information has not changed and is as follows: By dialing (888) 414-4601 (domestic) or +1 (646) 960-0313 (international) and requesting the Gates Industrial Corporation First-Quarter 2025 Earnings Conference Call or providing the Conference ID of 5772067. Live webcast accessed through Gates Industrial's website at An audio replay of the conference call will be available from approximately 1:00 p.m. Eastern time on April 30, 2025, until 11:59 p.m. Eastern time on May 7, 2025, and can be accessed domestically or internationally by dialing (800) 770-2030 or +1 (647) 362-9199, respectively, and providing the passcode 5772067, or by accessing Gates Industrial's website at About Gates Industrial Corporation plc Gates is a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. Gates offers a broad portfolio of products to diverse replacement channel customers, and to OEMs as specified components. Gates participates in many sectors of the industrial and consumer markets. Our products play essential roles in a diverse range of applications across a wide variety of end markets ranging from harsh and hazardous industries to everyday consumer applications including virtually every form of transportation. Our products are sold in more than 130 countries across our four commercial regions: the Americas; Europe, Middle East & Africa; Greater China; and East Asia & India. View original content to download multimedia: SOURCE Gates Industrial Corporation plc Sign in to access your portfolio
Yahoo
27-02-2025
- Business
- Yahoo
There's Been No Shortage Of Growth Recently For Gates Industrial's (NYSE:GTES) Returns On Capital
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at Gates Industrial (NYSE:GTES) and its trend of ROCE, we really liked what we saw. For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Gates Industrial: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.082 = US$496m ÷ (US$6.8b - US$722m) (Based on the trailing twelve months to December 2024). So, Gates Industrial has an ROCE of 8.2%. Ultimately, that's a low return and it under-performs the Machinery industry average of 12%. See our latest analysis for Gates Industrial In the above chart we have measured Gates Industrial's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Gates Industrial for free. Gates Industrial is showing promise given that its ROCE is trending up and to the right. The figures show that over the last five years, ROCE has grown 53% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects. In summary, we're delighted to see that Gates Industrial has been able to increase efficiencies and earn higher rates of return on the same amount of capital. Since the stock has returned a staggering 104% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Gates Industrial can keep these trends up, it could have a bright future ahead. One more thing, we've spotted 1 warning sign facing Gates Industrial that you might find interesting. While Gates Industrial isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets. 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
