Gates Industrial Corporation plc (NYSE:GTES) is a global manufacturer of power transmission and fluid power solutions. The company provides a wide range of products, including belts, hoses, and hydraulic components, serving industries such as automotive, construction, and agriculture. GTES competes with other industrial companies like JELD-WEN Holding, Inc. (JELD), Enerpac Tool Group Corp. (EPAC), SPX Technologies, Inc. (SPXC), Helios Technologies, Inc. (HLIO), and Frontdoor, Inc. (FTDR).
In evaluating GTES's financial efficiency, the Return on Invested Capital (ROIC) is 5.35%, while the Weighted Average Cost of Capital (WACC) is 12.60%. This results in a ROIC to WACC ratio of 0.42, indicating that GTES is not generating returns above its cost of capital. This suggests that the company may need to improve its operational efficiency or cost management to enhance shareholder value.
Comparatively, JELD-WEN Holding, Inc. (JELD) has a ROIC of 1.14% and a WACC of 7.47%, resulting in a ROIC to WACC ratio of 0.15. This is lower than GTES, indicating even less efficiency in generating returns over its cost of capital. On the other hand, Enerpac Tool Group Corp. (EPAC) shows a strong performance with a ROIC of 14.94% and a WACC of 9.54%, leading to a ROIC to WACC ratio of 1.57, which is significantly higher than GTES.
SPX Technologies, Inc. (SPXC) and Helios Technologies, Inc. (HLIO) have ROIC to WACC ratios of 0.99 and 0.61, respectively. SPXC's ratio is close to 1, suggesting it is nearly breaking even in terms of generating returns over its cost of capital. Meanwhile, HLIO's ratio is slightly better than GTES, but still below 1, indicating room for improvement in capital efficiency.
Frontdoor, Inc. (FTDR) stands out with a remarkable ROIC of 28.91% and a WACC of 8.94%, resulting in a ROIC to WACC ratio of 3.23. This indicates a strong ability to generate returns significantly above its cost of capital, showcasing robust financial performance and efficient capital utilization compared to its peers, including GTES.
