GTES gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 132 industry peers in the Machinery industry. Both the profitability and the financial health of GTES get a neutral evaluation. Nothing too spectacular is happening here. GTES has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year GTES was profitable.
In the past year GTES had a positive cash flow from operations.
Each year in the past 5 years GTES has been profitable.
In the past 5 years GTES always reported a positive cash flow from operatings.

1.2 Ratios

GTES has a Return On Assets (3.31%) which is in line with its industry peers.
The Return On Equity of GTES (7.02%) is comparable to the rest of the industry.
GTES has a Return On Invested Capital (6.29%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for GTES is below the industry average of 10.20%.
The 3 year average ROIC (5.94%) for GTES is below the current ROIC(6.29%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	3.31%
ROE	7.02%
ROIC	6.29%

ROA(3y)3.05%

ROA(5y)2.83%

ROE(3y)6.93%

ROE(5y)6.64%

ROIC(3y)5.94%

ROIC(5y)5.37%

1.3 Margins

With a decent Profit Margin value of 6.93%, GTES is doing good in the industry, outperforming 60.61% of the companies in the same industry.
GTES's Profit Margin has declined in the last couple of years.
GTES has a better Operating Margin (15.08%) than 70.45% of its industry peers.
In the last couple of years the Operating Margin of GTES has grown nicely.
GTES's Gross Margin of 40.78% is fine compared to the rest of the industry. GTES outperforms 75.76% of its industry peers.
GTES's Gross Margin has improved in the last couple of years.

		Industry Rank	Sector Rank
OM	15.08%
PM (TTM)	6.93%
GM	40.78%

OM growth 3Y1.81%

OM growth 5Y5.56%

PM growth 3Y-12.55%

PM growth 5Y-23.86%

GM growth 3Y1.68%

GM growth 5Y1.85%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so GTES is destroying value.
GTES has less shares outstanding than it did 1 year ago.
The number of shares outstanding for GTES has been reduced compared to 5 years ago.
GTES has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.28 indicates that GTES is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a Altman-Z score value of 2.28, GTES perfoms like the industry average, outperforming 42.42% of the companies in the same industry.
The Debt to FCF ratio of GTES is 7.83, which is on the high side as it means it would take GTES, 7.83 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 7.83, GTES perfoms like the industry average, outperforming 44.70% of the companies in the same industry.
GTES has a Debt/Equity ratio of 0.65. This is a neutral value indicating GTES is somewhat dependend on debt financing.
The Debt to Equity ratio of GTES (0.65) is worse than 64.39% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.65
Debt/FCF	7.83
Altman-Z	2.28

ROIC/WACC0.67

WACC9.35%

2.3 Liquidity

GTES has a Current Ratio of 3.52. This indicates that GTES is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 3.52, GTES belongs to the top of the industry, outperforming 84.09% of the companies in the same industry.
A Quick Ratio of 2.50 indicates that GTES has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 2.50, GTES belongs to the top of the industry, outperforming 84.09% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	3.52
Quick Ratio	2.5

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WACC

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Altman-Z score

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3. Growth

3.1 Past

GTES shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.91%.
Measured over the past 5 years, GTES shows a small growth in Earnings Per Share. The EPS has been growing by 7.44% on average per year.
Looking at the last year, GTES shows a decrease in Revenue. The Revenue has decreased by -0.75% in the last year.
The Revenue has been growing slightly by 2.00% on average over the past years.

EPS 1Y (TTM)7.91%

EPS 3Y-0.24%

EPS 5Y7.44%

EPS Q2Q%18.18%

Revenue 1Y (TTM)-0.75%

Revenue growth 3Y-0.64%

Revenue growth 5Y2%

Sales Q2Q%3.01%

3.2 Future

GTES is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.97% yearly.
The Revenue is expected to grow by 2.63% on average over the next years.

EPS Next Y12.31%

EPS Next 2Y9.27%

EPS Next 3Y11.1%

EPS Next 5Y9.97%

Revenue Next Year1.01%

Revenue Next 2Y2.04%

Revenue Next 3Y2.48%

Revenue Next 5Y2.63%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 15.35, the valuation of GTES can be described as correct.
GTES's Price/Earnings ratio is rather cheap when compared to the industry. GTES is cheaper than 86.36% of the companies in the same industry.
GTES's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.30.
A Price/Forward Earnings ratio of 14.18 indicates a correct valuation of GTES.
Based on the Price/Forward Earnings ratio, GTES is valued cheaply inside the industry as 87.12% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of GTES to the average of the S&P500 Index (25.57), we can say GTES is valued slightly cheaper.

		Industry Rank	Sector Rank
PE	15.35
Fwd PE	14.18

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of GTES indicates a rather cheap valuation: GTES is cheaper than 82.58% of the companies listed in the same industry.
GTES's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. GTES is cheaper than 68.94% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	20.83
EV/EBITDA	10.28

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of GTES may justify a higher PE ratio.