General Industrial Machinery & Equipment
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, and personal mobility application platforms; metal drive components; and kits for automotive replacement channels. It also provides fluid power solutions comprising stationary hydraulics, mobile hydraulics, vehicle systems, and other industrial application platforms; and hydraulics, including hoses, tubing, and fittings, as well as assemblies. The company's products are used in applications across various markets, including industrial off-highway end markets, such as construction and agriculture; industrial on-highway end markets comprising transportation, energy and resources, automotive, and personal mobility; and various industrial applications, such as automated manufacturing and logistics systems. It sells its 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.
Discounted Cash Flow Valuation of Gates Industrial Corp Plc
Growth
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Discount
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Multiple
g\r | +10% | +11% | +12% | +13% | +14% |
---|---|---|---|---|---|
0% | 10 | 9 | 8 | 8 | 7 |
+1% | 11 | 10 | 9 | 8 | 8 |
+2% | 13 | 11 | 10 | 9 | 8 |
+3% | 14 | 13 | 11 | 10 | 9 |
+4% | 17 | 14 | 12 | 11 | 10 |
Years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | TV |
---|---|---|---|---|---|---|---|---|---|---|---|---|
FCF | $342.1M | $382.1M | $424M | $467.3M | $511.5M | $556.1M | $600.5M | $643.9M | $685.7M | $725.1M | $761.3M | $7.613B |
DCF | $332.3M | $320.6M | $307.2M | $292.5M | $276.5M | $259.6M | $242.1M | $224.2M | $206.1M | $188.2M | $1.882B | |
Value | $4.531B |
In the chart Earnings are multiplied by this value.
High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.
Years | 12-2016 | 12-2017 | 12-2018 | 12-2019 | 01-2021 | 12-2021 | 12-2022 | 12-2023 | TTM |
---|---|---|---|---|---|---|---|---|---|
Net Margin | 2.1% | 5% | 7.3% | 22% | 2.8% | 8.6% | 6.2% | 6.5% | 7% |
ROA | - | 5.9% | 7.4% | 4.7% | 2.8% | 6.4% | 5.3% | 6.4% | 7% |
ROE | 5.4% | 11% | 11% | 23% | 2.5% | 8.5% | 6.4% | 6.6% | 7.1% |
The average Net Margin over the past 5 years is +8.97%.
The trend of Net Margin over the past 5 years is -1.34%.
The average ROA over the past 5 years is +5.51%.
The trend of ROA over the past 5 years is +0.01%.
The average ROE over the past 5 years is +9.57%.
The trend of ROE over the past 5 years is -1.81%.
Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.
Years | 12-2016 | 12-2017 | 12-2018 | 12-2019 | 01-2021 | 12-2021 | 12-2022 | 12-2023 | TTM | |
---|---|---|---|---|---|---|---|---|---|---|
Debt FCF | - | 18.53 | 20.89 | 10.95 | 11.02 | 8.59 | 13.43 | 5.98 | 7.00 | |
Debt Equity | - | 2.84 | 1.32 | 1.01 | 0.87 | 0.75 | 0.73 | 0.71 | 0.69 | |
MIN | ||||||||||
Graham Stability | - | - | - | 100% | 22% | 88% | 62% | 100% | 22% |
The Debt/FCF trailing twelve month is 7.00.
The trend of Debt/FCF over the past 5 years is -1.99.
Graham’s Stability measure stands at 0.22.
Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.
Years | 12-2016 | 12-2018 | 01-2021 | 12-2022 | Trend |
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Revenue | 3.8% | 1.3% | 8.5% | 0.45% | -0.51% |
Net Income | 22% | -1% | 43% | 5.5% | -20% |
Stockholders Equity | 19% | 8.7% | 3.6% | 2.9% | -8.6% |
FCF | 4.1% | 23% | 19% | 120% | 14% |
The Revenue CAGR over the past 5 years is +1.3%.
The trend of Revenue growth rate over the past 5 years is -0.51%.
The Earnings CAGR over the past 5 years is -1.03%.
The trend of Earnings growth rate over the past 5 years is -19.75%.
The Equity CAGR over the past 5 years is +8.71%.
The trend of Equity growth rate over the past 5 years is -8.61%.
The FCF CAGR over the past 5 years is +23.28%.
The trend of FCF growth rate over the past 5 years is +13.75%.