Gates Industrial Corporation plc (NYSE:GTES) shareholders are probably feeling a little disappointed, since its shares fell 8.7% to US$16.18 in the week after its latest quarterly results. It looks like a pretty bad result, all things considered. Although revenues of US$863m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 31% to hit US$0.15 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Gates Industrial after the latest results.

Taking into account the latest results, Gates Industrial's eight analysts currently expect revenues in 2024 to be US$3.53b, approximately in line with the last 12 months. Per-share earnings are expected to increase 2.7% to US$0.97. In the lead-up to this report, the analysts had been modelling revenues of US$3.57b and earnings per share (EPS) of US$1.04 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at US$19.70, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Gates Industrial, with the most bullish analyst valuing it at US$26.00 and the most bearish at US$14.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 0.2% annualised decline to the end of 2024. That is a notable change from historical growth of 4.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.6% annually for the foreseeable future. It's pretty clear that Gates Industrial's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Gates Industrial. Long-term earnings power is much more important than next year's profits. We have forecasts for Gates Industrial going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Gates Industrial .

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