GTES’s ROIC to WACC ratio of 0.43 indicates inefficiency in capital utilization compared to its peers.
JELD-WEN Holding, Inc. (JELD) struggles with a negative ROIC to WACC ratio of -0.13, highlighting its challenges in generating returns over its cost of capital.
Frontdoor, Inc. (FTDR) showcases the highest efficiency with a ROIC to WACC ratio of 1.86, indicating strong financial performance in generating returns over its cost of capital.
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 performance, the Return on Invested Capital (ROIC) is 5.35%, while the Weighted Average Cost of Capital (WACC) is 12.34%. This results in a ROIC to WACC ratio of 0.43, indicating that GTES is not generating returns that exceed its cost of capital. This suggests inefficiency in capital utilization compared to its peers.
Among its peers, JELD-WEN Holding, Inc. (JELD) shows a negative ROIC of -2.61% against a WACC of 19.95%, resulting in a ROIC to WACC ratio of -0.13. This indicates that JELD is struggling even more than GTES in generating returns over its cost of capital. On the other hand, Enerpac Tool Group Corp. (EPAC) demonstrates a strong performance with a ROIC of 14.94% and a WACC of 9.26%, leading to a favorable ROIC to WACC ratio of 1.61.
SPX Technologies, Inc. (SPXC) and Helios Technologies, Inc. (HLIO) also show better efficiency than GTES. SPXC has a ROIC of 10.90% and a WACC of 9.60%, resulting in a ROIC to WACC ratio of 1.14. Meanwhile, HLIO has a ROIC of 4.57% and a WACC of 9.09%, with a ratio of 0.50. Both companies generate returns that exceed their cost of capital, unlike GTES.
Frontdoor, Inc. (FTDR) stands out with the highest ROIC to WACC ratio of 1.86, as highlighted by its ROIC of 14.50% and WACC of 7.81%. This indicates that FTDR is the most efficient among the peers in generating returns over its cost of capital, showcasing its strong financial performance in comparison to GTES and others.
