As of May 23, 2025, Gates Industrial Corporation PLC has a Discounted Cash Flow (DCF) derived fair value of $28.49 per share. With the current market price at $21.02, this represents a potential upside of 35.5%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $25.72 |
| DCF Fair Value (10-year) | $28.49 |
| Potential Upside (5-year) | 22.4% |
| Potential Upside (10-year) | 35.5% |
| Discount Rate (WACC) | 7.7% - 9.9% |
Revenue is projected to grow from $3408 million in 12-2024 to $4519 million by 12-2034, representing a compound annual growth rate of approximately 2.9%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 3408 | 5% |
| 12-2025 | 3443 | 1% |
| 12-2026 | 3590 | 4% |
| 12-2027 | 3701 | 3% |
| 12-2028 | 3818 | 3% |
| 12-2029 | 3894 | 2% |
| 12-2030 | 4038 | 4% |
| 12-2031 | 4118 | 2% |
| 12-2032 | 4305 | 5% |
| 12-2033 | 4430 | 3% |
| 12-2034 | 4519 | 2% |
Net profit margin is expected to improve from 6% in 12-2024 to 14% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 220 | 6% |
| 12-2025 | 335 | 10% |
| 12-2026 | 387 | 11% |
| 12-2027 | 437 | 12% |
| 12-2028 | 490 | 13% |
| 12-2029 | 538 | 14% |
| 12-2030 | 558 | 14% |
| 12-2031 | 569 | 14% |
| 12-2032 | 595 | 14% |
| 12-2033 | 612 | 14% |
| 12-2034 | 624 | 14% |
with a 5-year average of $84 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 88 |
| 12-2026 | 88 |
| 12-2027 | 89 |
| 12-2028 | 94 |
| 12-2029 | 92 |
| 12-2030 | 95 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 80 |
| Days Inventory | 111 |
| Days Payables | 75 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 447 | 28 | 65 | (29) | 384 |
| 2026 | 661 | 43 | 90 | 38 | 490 |
| 2027 | 721 | 48 | 92 | 40 | 541 |
| 2028 | 789 | 54 | 95 | 18 | 621 |
| 2029 | 844 | 59 | 97 | 18 | 669 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 25.72 | 22.4% |
| 10-Year DCF (Growth) | 28.49 | 35.5% |
| 5-Year DCF (EBITDA) | 24.68 | 17.4% |
| 10-Year DCF (EBITDA) | 27.71 | 31.8% |
Is Gates Industrial Corporation PLC (GTES) a buy or a sell? Gates Industrial Corporation PLC is definitely a buy. Based on our DCF analysis, Gates Industrial Corporation PLC (GTES) appears to be significantly undervalued with upside potential of 35.5%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $21.02.