Gates Industrial Corp Plc

GTES

General Industrial Machinery & Equipment

Mkt Cap

$4.572B

PE

18.55

Debt

$2.395B

Cash

$525.7M

EV

$6.441B

FCF

$342.1M

Market Cap

$4.572B

P/E Ratio

18.55

Debt

$2.395B

Cash

$525.7M

EV

$6.441B

FCF

$342.1M

Charts data: {"Earnings":[{"time":"2016-12-30","value":57700000},{"time":"2017-12-29","value":151300000},{"time":"2018-12-28","value":245300000},{"time":"2019-12-27","value":690100000},{"time":"2021-01-01","value":79400000},{"time":"2021-12-31","value":297100000},{"time":"2022-12-30","value":220800000},{"time":"2023-12-29","value":232900000}],"Sales":[{"time":"2016-12-30","value":2747000000},{"time":"2017-12-29","value":3041700000},{"time":"2018-12-28","value":3347600000},{"time":"2019-12-27","value":3087100000},{"time":"2021-01-01","value":2793000000},{"time":"2021-12-31","value":3474400000},{"time":"2022-12-30","value":3554200000},{"time":"2023-12-29","value":3570200000}],"Net Margins":[{"time":"2016-12-30","value":0.021004732435384057},{"time":"2017-12-29","value":0.04974192063648618},{"time":"2018-12-28","value":0.07327637710598638},{"time":"2019-12-27","value":0.22354313109390692},{"time":"2021-01-01","value":0.028428213390619406},{"time":"2021-12-31","value":0.08551116739580934},{"time":"2022-12-30","value":0.062123684654774636},{"time":"2023-12-29","value":0.06523444064758277}],"Assets":[{"time":"2017-12-29","value":6853700000},{"time":"2018-12-28","value":6722600000},{"time":"2019-12-27","value":7411300000},{"time":"2021-01-01","value":7426300000},{"time":"2021-12-31","value":7533000000},{"time":"2022-12-30","value":7191600000},{"time":"2023-12-29","value":7254500000}],"Stockholders Equity":[{"time":"2016-12-30","value":1068400000},{"time":"2017-12-29","value":1428400000},{"time":"2018-12-28","value":2333700000},{"time":"2019-12-27","value":3010700000},{"time":"2021-01-01","value":3185000000},{"time":"2021-12-31","value":3481400000},{"time":"2022-12-30","value":3443600000},{"time":"2023-12-29","value":3543900000}],"ROE":[{"time":"2016-12-30","value":0.054005990265818045},{"time":"2017-12-29","value":0.10592271072528703},{"time":"2018-12-28","value":0.10511205382011399},{"time":"2019-12-27","value":0.22921579699073305},{"time":"2021-01-01","value":0.024929356357927788},{"time":"2021-12-31","value":0.0853392313437123},{"time":"2022-12-30","value":0.06411894528981299},{"time":"2023-12-29","value":0.06571855865007478}],"ROA":[{"time":"2017-12-29","value":0.058785765353021},{"time":"2018-12-28","value":0.07389997917472406},{"time":"2019-12-27","value":0.04679341006301189},{"time":"2021-01-01","value":0.028425999488305077},{"time":"2021-12-31","value":0.06426390548254347},{"time":"2022-12-30","value":0.053395628232938426},{"time":"2023-12-29","value":0.0637673168378248}]}

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.

Sector

10-Q
9/30/23
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7/1/23
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10-K
12/31/22
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3/30/19
10-K
12/29/18
10-Q
9/29/18
10-Q
8/2/18
10-Q
3/31/18
10-K
12/30/17

DCF

Discounted Cash Flow Valuation of Gates Industrial Corp Plc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

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

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth -3.7%

Earnings Stability -31%

Competitiveness and MOAT

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.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

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%

What is the average Net Margin?

The average Net Margin over the past 5 years is +8.97%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -1.34%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +5.51%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.01%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +9.57%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -1.81%.

Safety & Stabiliy

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.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

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%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 7.00.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -1.99.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.22.

Growth

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.

Earnings growth has not been increasing in the past years.

Years	12-2016	12-2018	01-2021	12-2022	Trend
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%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +1.3%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -0.51%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is -1.03%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -19.75%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +8.71%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -8.61%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +23.28%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +13.75%.