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Gates Industrial (GTES) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Gates Industrial (GTES) closed at $13.46, marking a +0.67% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.02%. At the same time, the Dow lost 0.13%, and the tech-heavy Nasdaq gained 0.08%.

Heading into today, shares of the manufacturer of power transmission and fluid power systems had gained 12.54% over the past month, outpacing the Construction sector's gain of 1.15% and the S&P 500's gain of 3.81% in that time.

GTES will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.19, down 47.22% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $731.20 million, down 7.69% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.95 per share and revenue of $3.09 billion. These totals would mark changes of -26.92% and -7.69%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for GTES. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. GTES is currently a Zacks Rank #1 (Strong Buy).

In terms of valuation, GTES is currently trading at a Forward P/E ratio of 14.15. Its industry sports an average Forward P/E of 15.9, so we one might conclude that GTES is trading at a discount comparatively.

The Engineering - R and D Services industry is part of the Construction sector. This group has a Zacks Industry Rank of 158, putting it in the bottom 39% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow GTES in the coming trading sessions, be sure to utilize Zacks.com.

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