Is Gates Industrial Corp. Plc overvalued or undervalued?

As of 16 June 2025, the valuation grade for Gates Industrial Corp. Plc has moved from very expensive to expensive, indicating a slight improvement in perceived value but still suggesting a high price relative to its fundamentals. The company is currently considered overvalued based on its P/E ratio of 23, which is higher than the peer average of approximately 21.5 for Crane NXT Co. and 20.97 for Franklin Electric Co., Inc. Additionally, the EV to EBITDA ratio stands at 10.13, which also exceeds the peer average of 10.12.
In terms of return on equity (ROE) and return on capital employed (ROCE), Gates shows figures of 7.96% and 10.55%, respectively, which are relatively modest compared to the industry standards. While the company has outperformed the S&P 500 over various time frames, including a 37.54% return over the past year compared to the index's 10.26%, the current valuation metrics suggest that it may not be a compelling investment at this time.