GTES
Gates Industrial Corporation plc
$24.48
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 8.4% above fair value
You pay
$24.48
Bear
$18.07
Fair
$22.59
Bull
$27.11
Bear
$18.07
-26.2%
$1.34 × 12x P/E
Fair
$22.59
-7.7%
$1.34 × 15x P/E
Bull
$27.11
+10.8%
$1.34 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
18.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $32.40 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $22.59 per share.
Warnings
The company's reported profits differ from official accounting profits by 40%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $32.40 (from 14 analysts). Our estimate is 38% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples