Q3 Rundown: Gates Industrial Corporation (NYSE:GTES) Vs Other Engineered Components and Systems Stocks

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the engineered components and systems industry, including Gates Industrial Corporation (NYSE:GTES) and its peers.

Engineered components and systems companies possess technical know-how in sometimes narrow areas such as metal forming or intelligent robotics. Lately, automation and connected equipment collecting analyzable data have been trending, creating new demand. On the other hand, like the broader industrials sector, engineered components and systems companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 13 engineered components and systems stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 2.5% while next quarter’s revenue guidance was 0.5% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.6% since the latest earnings results.

Gates Industrial Corporation (NYSE:GTES)

Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE:GTES) offers power transmission and fluid transfer equipment for various industries.

Gates Industrial Corporation reported revenues of $855.7 million, up 3% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ adjusted operating income estimates and a slight miss of analysts’ organic revenue estimates.

Ivo Jurek, Gates Industrial's Chief Executive Officer, commented, "Our team helped deliver improved sales and core growth in the third quarter supported by solid growth in Automotive Replacement and strong growth in Personal Mobility. Replacement channel revenues expanded low-single digits. We delivered double-digit EPS growth year-over-year and our adjusted EBITDA margin increased 90 basis points. Our balance sheet continued to improve as we paid down $100 million of gross debt during the quarter."

The stock is down 13.9% since reporting and currently trades at $22.23.

Read our full report on Gates Industrial Corporation here, it’s free for active Edge members.

Best Q3: Timken (NYSE:TKR)

Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.

Timken reported revenues of $1.16 billion, up 2.7% year on year, outperforming analysts’ expectations by 3.6%. The business had an exceptional quarter with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ revenue estimates.

The market seems content with the results as the stock is up 3.3% since reporting. It currently trades at $79.81.

Is now the time to buy Timken? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Park-Ohio (NASDAQ:PKOH)

Based in Cleveland, Park-Ohio (NASDAQ:PKOH) provides supply chain management services, capital equipment, and manufactured components.

Park-Ohio reported revenues of $398.6 million, down 4.5% year on year, falling short of analysts’ expectations by 4.5%. It was a disappointing quarter as it posted full-year EPS guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.

As expected, the stock is down 2.2% since the results and currently trades at $20.61.

Read our full analysis of Park-Ohio’s results here.

Mayville Engineering (NYSE:MEC)

Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE:MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.

Mayville Engineering reported revenues of $144.3 million, up 6.6% year on year. This result topped analysts’ expectations by 2.8%. Overall, it was an exceptional quarter as it also put up a beat of analysts’ EPS and adjusted operating income estimates.

The stock is down 10.3% since reporting and currently trades at $16.18.

Read our full, actionable report on Mayville Engineering here, it’s free for active Edge members.

Regal Rexnord (NYSE:RRX)

Headquartered in Milwaukee, Regal Rexnord (NYSE:RRX) provides power transmission and industrial automation products.

Regal Rexnord reported revenues of $1.50 billion, up 1.3% year on year. This number was in line with analysts’ expectations. However, it was a slower quarter as it logged full-year EPS guidance missing analysts’ expectations and a miss of analysts’ adjusted operating income estimates.

The stock is down 4.8% since reporting and currently trades at $143.34.

Read our full, actionable report on Regal Rexnord here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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