Why Did Gates Industrial Corporation plc (GTES) Investors Go Insane?

Analysts are forecasting revenue to climb 5.4 percent to $824M in the next fiscal quarter, while earnings are seen soaring by nearly 18.18 percent to $0.26 per share. History has shown that shares in Gates Industrial Corporation plc have gone down on 2 different earnings reaction days and are predicted to add 0.07 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.3 per share, better than the $0.25, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $792M, worse than the $824M analysts expected. Earnings are estimated to increase by -18.9 percent this year, 2.17 percent next year and continue to increase by 16.83 percent annually for the next 5 years.

Gates Industrial Corporation plc (GTES) will probably climb 15.07 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $23 price as 12-month high target. This represents a whopping 42.59 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $18, which represents a return potential of 11.59 percent when compared to the closing price of the stock of $16.13 on Wednesday, February 13. The lowest price target for the stock is $15 — slightly more than -7.01 percent from GTES’s current share price.

The stock is currently hovering around the first support level of $15.49. Below this, the next support is placed in the zone of $14.86. Till the time, the GTES stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 68.55 on daily chart, which may remain a cause for concern. If the price breaks below $14.86 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $17.18 mark may result into a pull-back move towards $18.24 level.

On 13th of February, Gates Industrial Corporation plc (NYSE:GTES) shares ended higher after a volatile session. The shares accumulated 0.75 points or 4.88 percent at $16.13 with a light trade volume of 1.355 million shares. After opening the session at $16.34, the shares went as high as $17.6 and as low as $15.91, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $4.67 billion and now has 289.78 million shares outstanding. Gates Industrial Corporation plc (GTES) stock has gained 10.56 percent of market value in 21 trading days.

GTES stock has a trailing 3-year beta of 0, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.57 a share in the trailing twelve months. The stock’s value has surged 21.83 percent year to date (YTD) against a decline of -10.39 percent in 12 month’s time. The company’s shares still trade -20.5 percent away from its 1-year high of $20.29 and 32.27 percent up from 52-week low of $12.19. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of Gates Industrial Corporation plc (GTES) are trading at a P/E ratio of 0 times earnings reported for the past 12 months. The industry GTES operates in has an average P/E of 38.09. Its P/E ratio went as low as 0X and as high as 0 over the 5-year span. Further, it is sporting a 1.4 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.36. 39.6 percent is the gross profit margin for Gates Industrial Corporation plc and operating margin sits at 14 percent. Along with this, the net profit margin is 8.6 percent.

Let’s take a look at some insider activity at Gates Industrial Corporation plc (NYSE:GTES) and see the pattern. The earliest insider trade took place on 11/06/2018. Jurek Ivo gathered a total of 5 thousand shares of company at average share price of $14.5. The total for the purchase was set at $72.5 thousand. After this transaction, the Chief Exec Officer & Director account balance stood at 174.12 thousand shares. The stock grew 11.24 percent since that insider purchase. On 05/25/2018, Seely Jamey S, Executive VP General Counsel, purchased 1 thousand shares at a price per share of $15.35. This added 15.35 thousand shares to the insider’s fortune and the stock saw a 5.08 percent rally in value since the news became public. This transaction left 1.95 thousand shares in the Executive VP General Counsel account.

On 05/25/2018, Chief Exec Officer & Director Jurek Ivo performed a purchase transaction worth $153.6 thousand. This purchase at $15.36 each has added 10 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded 5.01 percent increase since the transaction was reported. The insider now is left with 169.12 thousand shares remaining in the account. Seely Jamey S, who performs the Executive VP General Counsel job, bought 0.95 thousand shares for $14.29 thousand. The acquisition occurred on 05/07/2018 was priced at $15.04 per share. The share price soared 7.25 percent since the reporting date. Seely Jamey S now left with a stake of 0.95 thousand GTES stock worth $15.32 thousand after the insider buying.