Gates Industrial Corp plc (NYSE: GTES)

Sector: Industrials Industry: Specialty Industrial Machinery CIK: 0001718512
Market Cap 7.01 Bn
P/B 2.10
P/E 27.89
P/S 2.04
ROIC (Qtr) 6.30
Div Yield % 0.00
Rev 1y % (Qtr) 3.23
Total Debt (Qtr) 2.36 Bn
Debt/Equity (Qtr) 0.71
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About

Investment thesis

Bull case

  • Healthy cash reserves of 812.10M provide 22.43x coverage of short-term debt 36.20M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 478.10M provides exceptional 19.20x coverage of minority interest expenses 24.90M, showing strong core operations.
  • Operating cash flow of 478.10M provides strong 17.58x coverage of stock compensation 27.20M, indicating sustainable incentive practices.
  • Robust free cash flow of 407.20M exceeds capital expenditure of 70.90M by 5.74x, indicating strong organic growth funding capability.
  • Cash position of 812.10M provides exceptional 32.61x coverage of minority interest expenses 24.90M, indicating strong liquidity.

Bear case

  • Operating cash flow of 478.10M barely covers its investment activities of (119M), with a coverage ratio of -4.02, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating earnings of 440.40M show weak coverage of depreciation charges of 213.80M, with a 2.06 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 407.20M represents just -3.30x of debt issuance (123.40M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 213.80M relative to operating cash flow of 478.10M, which is 0.45x suggests significant maintenance capital requirements affecting free cash flow.
  • Operating cash flow of 478.10M is outpaced by equity issuance of (108.90M) (-4.39 ratio), indicating concerning reliance on equity markets for funding operations.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Specialty Industrial Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GEV GE Vernova Inc. 224.93 Bn 194.57 6.14 0.00 Bn
2 ETN Eaton Corp plc 153.13 Bn 38.99 5.75 11.22 Bn
3 PH Parker-Hannifin Corp 135.87 Bn 165.29 12.09 9.87 Bn
4 EMR Emerson Electric Co 111.68 Bn 47.10 4.65 13.41 Bn
5 ITW Illinois Tool Works Inc 86.68 Bn 28.27 5.40 8.97 Bn
6 CMI Cummins Inc 82.13 Bn 28.89 2.44 7.55 Bn
7 AME Ametek Inc/ 53.79 Bn 36.34 7.27 2.28 Bn
8 ROK Rockwell Automation, Inc 43.80 Bn 44.24 5.11 3.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.21 2.28
EV to Cash from Ops. EV/CFO 18.16 37.14
EV to Debt EV to Debt 3.68 34.39
EV to EBIT EV/EBIT 19.72 27.71
EV to EBITDA EV/EBITDA 12.79 25.34
EV to Free Cash Flow [EV/FCF] EV/FCF 21.32 133.36
EV to Market Cap EV to Market Cap 1.24 1.04
EV to Revenue EV/Rev 2.52 39.88
Price to Book Value [P/B] P/B 2.10 6.22
Price to Earnings [P/E] P/E 27.89 143.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.57
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 15.73
Dividend per Basic Share Div per Share (Qtr) 0.00 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 82.53
Interest Coverage Int. cover (Qtr) 3.50 12.34
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.28 -45.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 19.08 118.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 10.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 19.21 -283.03
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -1.45 -36.87
EBIT Growth (1y) % EBIT 1y % (Qtr) -3.88 -80.72
EBT Growth (1y) % EBT 1y % (Qtr) 4.00 -120.93
EPS Growth (1y) % EPS 1y % (Qtr) 30.67 -39.22
FCF Growth (1y) % FCF 1y % (Qtr) 31.99 85.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.97 0.87
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.48 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.10
Cash Ratio Cash Ratio (Qtr) 1.10 3.01
Current Ratio Curr Ratio (Qtr) 3.37 4.97
Debt to Equity Ratio Debt/Equity (Qtr) 0.71 0.38
Interest Cover Ratio Int Coverage (Qtr) 3.50 12.34
Times Interest Earned Times Interest Earned (Qtr) 3.50 12.34
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.00 -7,291.27
EBIT Margin % EBIT Margin % (Qtr) 12.79 -7,413.30
EBT Margin % EBT Margin % (Qtr) 9.13 -9,015.79
Gross Margin % Gross Margin % (Qtr) 39.80 -32.61
Net Profit Margin % Net Margin % (Qtr) 7.30 -7,962.06