Yahoo Finance Is Now The Time To Look At Buying Gates Industrial Corporation plc (NYSE:GTES)?
While Gates Industrial Corporation plc (NYSE:GTES) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$16.33 and falling to the lows of US$10.91. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Gates Industrial's current trading price of US$10.94 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Gates Industrial’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Gates Industrial
What's the opportunity in Gates Industrial?
Great news for investors – Gates Industrial is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 11.82x is currently well-below the industry average of 20.59x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Gates Industrial’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Gates Industrial generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 8.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Gates Industrial, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since GTES is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on GTES for a while, now might be the time to enter the stock. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GTES. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Gates Industrial (including 1 which is concerning).
If you are no longer interested in Gates Industrial, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
