Gates Industrial (NYSE:GTES) Announces Earnings Results

Gates Industrial (NYSE:GTES) posted its earnings results on Thursday. The company reported $0.38 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.37 by $0.01, Briefing.com reports. Gates Industrial had a return on equity of 10.36% and a net margin of 7.30%.The firm had revenue of $856.20 million for the quarter, compared to the consensus estimate of $853.35 million. During the same quarter in the prior year, the business posted $0.36 earnings per share. The business’s quarterly revenue was up 3.2% on a year-over-year basis. Gates Industrial updated its FY 2026 guidance to 1.520-1.680 EPS.

Here are the key takeaways from Gates Industrial’s conference call:

• Gates delivered record adjusted EBITDA dollars and record adjusted EPS of $1.52 in 2025, reduced net leverage to 1.85x, finished the year with ~ $800M cash, and repurchased over $100M of stock in Q4.
• 2026 guide calls for **core sales growth of 1%–4%**, adjusted EBITDA of $775M–$835M and adjusted EPS of $1.52–$1.68 (midpoint ~5% growth), with CapEx ~$120M and 90%+ free cash flow conversion assumed.
• Management highlighted secular wins: Personal Mobility (>25% core growth in 2025 and +28% in Q4) and a rapidly growing data center business (4x YoY orders), with a $100M–$200M ambition by 2028 to drive above-market growth.
• Demand indicators improved exiting 2025—book‑to‑bill was above 1x and January order trends continued the strength, led by industrial OEM orders, supporting cautious optimism for a gradual industrial recovery.
• Near‑term headwinds include an ERP rollout and footprint optimization that will cost ~$30M–$35M (about a 100 bps drag on adjusted EBITDA in H1 2026), plus Q1 revenue/margin pressure from fewer shipping days and transition inefficiencies.

Gates Industrial Price Performance

Shares of NYSE:GTES opened at $28.04 on Friday. The company’s fifty day moving average price is $23.09 and its 200-day moving average price is $23.85. The firm has a market capitalization of $7.24 billion, a price-to-earnings ratio of 28.90 and a beta of 1.27. Gates Industrial has a one year low of $14.70 and a one year high of $28.47. The company has a debt-to-equity ratio of 0.61, a current ratio of 3.37 and a quick ratio of 2.50.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Quantinno Capital Management LP lifted its stake in Gates Industrial by 69.8% in the second quarter. Quantinno Capital Management LP now owns 1,228,675 shares of the company’s stock worth $28,296,000 after purchasing an additional 504,895 shares during the last quarter. Treasurer of the State of North Carolina increased its holdings in shares of Gates Industrial by 9.4% in the second quarter. Treasurer of the State of North Carolina now owns 118,441 shares of the company’s stock worth $2,728,000 after buying an additional 10,171 shares during the period. State Street Corp lifted its stake in shares of Gates Industrial by 2.4% in the 2nd quarter. State Street Corp now owns 7,346,884 shares of the company’s stock valued at $169,199,000 after acquiring an additional 170,597 shares during the last quarter. Cerity Partners LLC boosted its holdings in Gates Industrial by 11.4% during the 2nd quarter. Cerity Partners LLC now owns 197,126 shares of the company’s stock valued at $4,540,000 after acquiring an additional 20,165 shares during the period. Finally, Federated Hermes Inc. boosted its holdings in Gates Industrial by 16.5% during the 2nd quarter. Federated Hermes Inc. now owns 128,520 shares of the company’s stock valued at $2,960,000 after acquiring an additional 18,208 shares during the period. 98.50% of the stock is currently owned by hedge funds and other institutional investors.

Key Stories Impacting Gates Industrial

Here are the key news stories impacting Gates Industrial this week:

• Positive Sentiment: Q4 adjusted EPS beat estimates — Gates reported adjusted EPS of $0.38 vs. the $0.37 consensus, confirming modest improvement in profitability year-over-year. Read More.
• Positive Sentiment: Capital returns and cash generation — Management repurchased approximately $105 million of shares and generated $478.1 million of operating cash flow for 2025, supporting shareholder returns and balance-sheet flexibility. Read More.
• Neutral Sentiment: FY‑2026 guidance essentially in line with consensus — Gates provided an EPS range of $1.520–$1.680 (consensus ~$1.56) and revenue guidance of $3.5B–$3.6B, leaving room for execution risk but not signaling a material reset. Read More.
• Neutral Sentiment: Revenue roughly in line with estimates but soft growth — Q4 sales were $856.2M (in line with estimates) and up just 3.2% YoY, reflecting limited core sales expansion. Read More.
• Negative Sentiment: Underlying demand and GAAP profitability show restraints — core sales growth was modest (0.6% in the quarter, 1.0% for FY), and GAAP net income per diluted share for the quarter was $0.20 versus adjusted $0.38, highlighting one‑time items and ongoing margin sensitivity. Read More.
• Neutral Sentiment: Management provided supporting materials — earnings slide deck and conference-call materials are available for deeper detail on segment trends and the drivers behind guidance. Read More.

Analyst Ratings Changes

GTES has been the topic of a number of recent research reports. Royal Bank Of Canada reissued an “outperform” rating and set a $31.00 price objective on shares of Gates Industrial in a report on Friday. Weiss Ratings restated a “hold (c+)” rating on shares of Gates Industrial in a research report on Monday, December 29th. Robert W. Baird set a $39.00 price objective on shares of Gates Industrial in a research note on Friday. Citigroup increased their target price on shares of Gates Industrial from $27.00 to $33.00 and gave the stock a “buy” rating in a research note on Friday. Finally, UBS Group reissued a “buy” rating and issued a $33.00 price target on shares of Gates Industrial in a report on Friday. Six research analysts have rated the stock with a Buy rating and six have assigned a Hold rating to the company. Based on data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and a consensus target price of $29.67.

About Gates Industrial

Gates Industrial Corporation PLC (NYSE: GTES) is a leading global manufacturer of engineered power transmission belts and fluid power products. The company’s portfolio includes synchronous belts, V-belts, hose assemblies, fittings and hydraulic components designed to support a wide range of industrial and automotive applications. Gates Industrial serves sectors such as agriculture, mining, construction, manufacturing, transportation and consumer markets, offering solutions that improve performance, reliability and efficiency in demanding operating environments.

In its power transmission segment, Gates Industrial produces high-strength belts engineered for precise motion control and minimal maintenance.