Garrett Motion Inc. Common Stock
GTX
$25.87
-0.84%
Garrett Motion Inc. designs, manufactures, and sells engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (OEMs), with expertise spanning gasoline, diesel, natural gas, and electrified powertrains, and it also serves the aftermarket through its distribution network. The company is a technology leader in forced-induction and electrified boosting, positioning it as a critical supplier to global automakers rather than a commodity parts vendor, with the majority of revenue derived from gasoline applications and the European region. The current investor narrative centers on whether Garrett can sustain its post-spinoff earnings momentum amid a cautious 2026 automotive production outlook, which pressured shares earlier in the year even as the stock has delivered a powerful multi-month recovery. Debate also hinges on the company's ability to convert its turbocharger franchise into a hybrid and electric-boosting growth story, while a leveraged balance sheet and negative book equity keep risk considerations front and center.…
GTX
Garrett Motion Inc. Common Stock
$25.87
Related headlines
Investment Opinion: Should I buy GTX Today?
Based on the synthesis of valuation, growth, and risk factors, GTX warrants a Hold rating with a bullish bias. The core thesis is that Garrett Motion is a deeply undervalued auto supplier with strong cash generation and a clear path to multiple expansion, but its leveraged balance sheet and cyclical exposure introduce material risks that justify caution. The analyst consensus average target of $36.83 implies 36.1% upside, and even the lowest target of $34.00 suggests 25.6% upside, anchoring a favorable risk/reward skew.
Supporting evidence includes the attractive valuation: an 11.25x trailing PE, 0.97x price-to-sales, and a PEG ratio of 0.51, which is roughly half the multiple justified by growth. Revenue is stable at approximately $4.158 billion, with a net margin of 8.65% and operating margin of 13.76%, demonstrating efficient profit conversion. The price-to-cash-flow ratio of 8.43 indicates robust cash generation, and the 1.49% dividend yield with a 16.77% payout ratio shows a commitment to shareholder returns. The 1-year price gain of 95.03% and relative strength of +80.02% versus SPY confirm strong momentum, though the recent 3-month decline of 14.74% suggests a consolidation phase.
The biggest risks that could invalidate the thesis are the negative equity and high leverage (debt-to-equity of -1.879), tight liquidity (current ratio of 0.968), and cyclical OEM exposure amid a cautious 2026 production outlook. The rating would upgrade to Buy if free cash flow remains robust and debt reduction accelerates, or if the stock breaks above resistance at $36.25. It would downgrade to Sell if revenue growth turns negative, the current ratio deteriorates further, or the stock breaks below support at $25. Relative to its history and peers, GTX appears undervalued, but the discount may be partly justified by structural concerns, so confirmation from cash flow and balance sheet improvement is needed.
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GTX 12-Month Price Forecast
Garrett Motion presents a compelling deep-value opportunity with a 11.25x PE and 0.51 PEG, supported by strong cash generation and uniformly bullish analyst targets. However, the leveraged balance sheet, negative equity, and cyclical OEM exposure introduce significant risks that warrant a neutral stance. The stock's recent 3-month decline of 14.74% and 3-month relative strength of -18.08% suggest a consolidation phase, but the long-term uptrend remains intact. I would upgrade to bullish if free cash flow remains robust and debt reduction accelerates, or if the stock breaks above resistance at $36.25. I would downgrade to bearish if revenue growth turns negative, the current ratio deteriorates further, or the stock breaks below support at $25.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Garrett Motion Inc. Common Stock's 12-month outlook, with a consensus price target around $36.00 and implied upside of +39.2% versus the current price.
Average Target
$36.00
0 analysts
Implied Upside
+39.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$33 - $42
Analyst target range
Six analysts cover Garrett Motion, and their consensus average target price is $36.83, which implies approximately +36.1% upside from the current price of $27.07. The target range spans $34.00 on the low end to $42.00 on the high end, a spread of $8.00, or roughly 22% of the average target, indicating moderate rather than extreme dispersion in analyst views. Notably, even the lowest target of $34.00 sits about 25.6% above the current price, meaning every covering analyst sees meaningful upside — a uniformly bullish signal that contrasts with the stock's recent 3-month decline of -14.74%. The consensus leans clearly bullish, though the recommendation field is listed as "none," so a formal Buy/Hold/Sell distribution is not available in the provided data. The high target of $42.00 implies roughly +55.2% upside and likely assumes a successful 2026 production environment, multiple expansion from the current 11.25x PE toward mid-teens, and continued execution on electrified-boosting growth. The low target of $34.00 still implies +25.6% upside and probably prices in a more conservative production backdrop with stable margins but limited multiple re-rating. The relatively tight $8.00 spread between the low and high targets signals stronger analyst conviction than is typical for a small-cap cyclical, which is a constructive signal. However, with only six analysts covering the stock, coverage is thin, and the absence of institutional ratings data means recent upgrade/downgrade patterns cannot be assessed; limited coverage can contribute to higher volatility and less efficient price discovery, though Garrett's $3.48 billion market cap and 2.39 short ratio suggest adequate liquidity and no extreme short-squeeze dynamic.
Bulls vs Bears: GTX Investment Factors
The bull case for Garrett Motion rests on its deep-value valuation (11.25x PE, 0.51 PEG, 0.97 PS), strong cash generation (8.43x price-to-cash-flow), and uniformly bullish analyst targets implying 36.1% upside. The bear case centers on the leveraged balance sheet (negative equity, 0.968 current ratio), cyclical OEM exposure, and recent momentum deceleration (-14.74% over 3 months). Currently, the bull evidence appears stronger: the valuation discount is substantial, analyst targets are well above the current price, and the long-term uptrend remains intact despite the pullback. The single most important tension is whether the low multiple represents a genuine mispricing or a value trap reflecting structural concerns about the auto supply chain and Garrett's capital structure. Resolution will likely come from free cash flow durability and debt reduction progress over the next few quarters.
Bullish
- Deep Value Multiples: GTX trades at a trailing PE of 11.25x and a forward PE of 11.77x, with a PEG ratio of just 0.51, suggesting the stock is priced at roughly half the multiple justified by its growth rate. The price-to-sales ratio of 0.97 is below 1.0, a classic deep-value signal for a profitable auto supplier with a 13.76% operating margin.
- Strong Cash Generation: The price-to-cash-flow ratio of 8.43 indicates the business generates substantial cash relative to its $3.48 billion market cap. With a 16.77% payout ratio and a 1.49% dividend yield, Garrett returns cash to shareholders while still retaining funds for debt reduction and growth initiatives.
- Analyst Targets Imply Upside: Six analysts cover GTX with an average target price of $36.83, implying 36.1% upside from the current $27.07. Even the lowest target of $34.00 sits 25.6% above the current price, and the high target of $42.00 implies 55.2% upside, reflecting uniformly bullish sentiment.
- Powerful Long-Term Momentum: Despite a recent 3-month decline of 14.74%, GTX has gained 95.03% over the past year and 55.75% year-to-date, massively outperforming the S&P 500's 15.01% and 12.86% respectively. The 1-year relative strength versus SPY is +80.02%, confirming sustained leadership.
Bearish
- Negative Equity and High Leverage: GTX has a debt-to-equity ratio of -1.879 and negative book value (PB of -4.34), a legacy of its leveraged spinoff. This means the company relies on internally generated cash flow and refinancing access rather than an equity cushion, making it vulnerable to credit market tightening or operational setbacks.
- Tight Liquidity Position: The current ratio of 0.968 is below 1.0, indicating current liabilities marginally exceed current assets. This tight liquidity could constrain flexibility if the automotive production cycle turns down or if the company faces unexpected cash needs.
- Recent Momentum Deceleration: The 3-month price change is -14.74% and 3-month relative strength versus SPY is -18.08%, a stark reversal from the +95.03% 1-year gain. This suggests the stock is in a consolidation phase and may continue to digest its massive run, especially with the 1-month change nearly flat at +0.22%.
- Cyclical OEM Exposure: Garrett's revenue is heavily dependent on global automotive production, and the cautious 2026 production outlook has already pressured shares. With revenue estimated at $4.158 billion and net margin at 8.65%, a 10% decline in vehicle builds could significantly impact earnings.
GTX Technical Analysis
Garrett Motion is in a powerful longer-term uptrend, with a 1-year price change of +95.03% and a year-to-date gain of +55.75%, decisively outperforming the S&P 500's +15.01% and +12.86% over the same periods. At a current price of $27.07, the stock sits at roughly 61% of its 52-week range (52-week low of $12.264, 52-week high of $36.25), meaning it has surrendered a meaningful portion of its earlier highs but remains far above its lows. This positioning suggests a stock in a consolidation phase within a broader uptrend rather than a broken chart, though the distance from the high implies momentum has cooled from its spring peak. Recent momentum is mixed and has decelerated sharply: the 1-month change is +0.22% and the 3-month change is -14.74%, a stark divergence from the +95.03% 1-year and +47.04% 6-month gains. This divergence signals that the stock has been digesting its massive run, with the 3-month decline representing a mean-reversion pullback rather than a trend reversal, especially given the +3.12% single-day bounce on the latest close. Relative strength confirms the cooling, with 3-month relative strength versus SPY at -18.08% even as 1-year relative strength remains a robust +80.02%. Key technical levels are well defined: support rests near the 52-week low of $12.264, with intermediate support around the $25-$26 area that has held repeatedly in September, while resistance sits at the 52-week high of $36.25. A breakout above $36.25 would confirm a resumption of the primary uptrend and likely target new highs, whereas a breakdown below $25 would threaten the recovery structure and open the door toward the mid-$20s or lower. With a beta of 0.795, Garrett is roughly 20% less volatile than the broader market, which is notable for a small-cap auto supplier and implies position sizing can be somewhat more aggressive than a high-beta cyclical, though the -30.17% max drawdown shows the stock is still capable of sharp corrections.
Beta
0.84
0.84x market volatility
Max Drawdown
-30.2%
Largest decline past year
52-Week Range
$12-$36
Price range past year
Annual Return
+98.5%
Cumulative gain past year
| Period | GTX Return | S&P 500 |
|---|---|---|
| 1m | -7.5% | +0.9% |
| 3m | -20.6% | +3.4% |
| 6m | +32.8% | +14.4% |
| 1y | +98.5% | +16.2% |
| ytd | +48.8% | +14.0% |
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GTX Fundamental Analysis
Garrett's revenue trajectory is best characterized as stable-to-modestly-growing at scale, with analyst estimates pointing to average revenue of approximately $4.158 billion (range of $4.105 billion to $4.229 billion), a tight band that suggests limited near-term growth variability. The company's net margin of 8.65% on that revenue base implies net income in the neighborhood of $360 million, consistent with a mature but profitable industrial supplier. The cautious 2026 automotive production outlook referenced in recent news is the key swing factor for growth, as Garrett's OEM-dependent model means global vehicle build rates directly drive volume; the aftermarket and electrified-boosting businesses provide some offset but are not yet large enough to fully decouple results from the production cycle. Profitability is solid for the auto-parts industry: gross margin stands at 24.50%, operating margin at 13.76%, and net margin at 8.65%, with a trailing EPS of $0.089 and a forward EPS estimate of $2.72. The gap between trailing and forward EPS is enormous and warrants scrutiny, but the forward estimate implies a substantial earnings step-up that the market is clearly pricing in; the 13.76% operating margin indicates the core business converts revenue to profit efficiently despite the capital-intensive nature of turbocharger manufacturing. Return on assets of 14.15% is healthy, though ROE of -38.65% and debt-to-equity of -1.879 reflect negative shareholders' equity, a legacy of the company's leveraged spinoff structure rather than operational distress. The current ratio of 0.968 is slightly below 1.0, indicating current liabilities marginally exceed current assets and that liquidity is tight, while the price-to-cash-flow ratio of 8.43 suggests the business generates meaningful cash relative to its market value. The negative book value and high leverage mean Garrett depends on internally generated cash flow and refinancing access rather than equity cushion, making free cash flow durability the single most important fundamental metric to monitor; the 1.49% dividend yield and 16.77% payout ratio indicate a modest but real commitment to returning cash despite the leveraged capital structure.
Quarterly Revenue
N/A
N/A
Revenue YoY Growth
N/A
YoY Comparison
Gross Margin
N/A
Latest Quarter
Free Cash Flow
N/A
Last 12 Months
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Valuation Analysis: Is GTX Overvalued?
Because Garrett is profitable, the PE ratio is the appropriate primary metric: the trailing PE is 11.25x and the forward PE is 11.77x, both low in absolute terms and unusually close together. The near-identical trailing and forward multiples imply the market is not pricing in dramatic near-term earnings growth beyond what is already reflected, which is notable given the forward EPS estimate of $2.72 versus trailing EPS of $0.089 — a discrepancy that likely reflects a data artifact or a major earnings inflection the market has already discounted. The PEG ratio of 0.51 is the most striking valuation signal, suggesting the stock trades at roughly half the multiple justified by its growth rate, a classic deep-value characteristic if the growth estimate proves durable. Against the auto-parts sector, Garrett's 11.25x trailing PE and 0.97x price-to-sales ratio represent a discount to the broader market and to many higher-multiple industrial peers, though the negative book value (PB of -4.34x) makes book-based comparisons meaningless. The EV/EBITDA of 8.07x and EV/Sales of 1.64x are moderate for a supplier with 13.76% operating margins, and the discount appears at least partly justified by the leveraged balance sheet, negative equity, and cyclical OEM exposure rather than being a pure mispricing. Historical ratio data is not available in the provided inputs, so a precise assessment of where current multiples sit within Garrett's own trading band cannot be made; however, the combination of a sub-1.0 PS ratio, an 11x PE, and a 0.51 PEG suggests the stock is valued toward the lower end of what a profitable, cash-generating auto supplier would typically command. The key valuation risk is that the low multiple is a value trap reflecting structural concerns — negative equity, sub-1.0 current ratio, and EV transition uncertainty — rather than an opportunity, so confirmation from free cash flow and debt reduction would be required to validate the discount as mispricing.
PE
11.2x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
8.1x
Enterprise Value Multiple
Investment Risk Disclosure
Garrett Motion faces significant financial and operational risks stemming from its leveraged capital structure. The company has a debt-to-equity ratio of -1.879 and negative book value (PB of -4.34), a legacy of its spinoff, meaning it operates without an equity cushion and depends on internally generated cash flow and refinancing access. The current ratio of 0.968 is below 1.0, indicating current liabilities marginally exceed current assets, which could constrain liquidity if the automotive cycle turns down. Additionally, revenue is concentrated in gasoline applications and the European region, exposing Garrett to regional production declines and regulatory shifts away from internal combustion engines. The 8.65% net margin, while respectable, leaves limited buffer if input costs rise or pricing pressure intensifies.
Market and competitive risks include valuation compression if the low multiple proves to be a value trap rather than a mispricing. GTX trades at 11.25x trailing earnings and 0.97x sales, a discount to many industrial peers, but this discount may reflect structural concerns about the auto supply chain and Garrett's negative equity. The stock's beta of 0.795 suggests lower volatility than the broader market, but the -30.17% max drawdown shows it is still capable of sharp corrections. Competitive disruption from electric vehicles could erode demand for turbochargers, though Garrett's electric-boosting technologies offer a potential offset. Recent news highlights a cautious 2026 automotive production outlook that pressured shares, and sector rotation away from cyclical auto parts could further weigh on the stock.
The worst-case scenario would involve a sharp downturn in global vehicle production, particularly in Europe, combined with refinancing difficulties due to the leveraged balance sheet. In this scenario, GTX could retest its 52-week low of $12.264, representing a decline of approximately 54.7% from the current price of $27.07. Even a moderate pullback to the $20-$22 range, which would still be above the 52-week low, would represent a 19-26% loss. The analyst low target of $34.00 is well above the current price, so it does not provide a downside anchor; instead, the 52-week low and the -30.17% max drawdown serve as more realistic bear-case references. Investors should be prepared for potential losses of 30-55% in a severe adverse scenario.
FAQ
The most severe risk is financial: GTX has negative equity (debt-to-equity of -1.879) and a current ratio of 0.968, meaning it relies on cash flow and refinancing to operate. A downturn in auto production could strain liquidity. Second, competitive risk: accelerated EV adoption could reduce demand for traditional turbochargers, though Garrett's electric-boosting technologies offer some offset. Third, macro risk: a global recession or European production decline could hit revenue, which is concentrated in gasoline applications and Europe. Fourth, company-specific risk: thin analyst coverage (six analysts) and no formal recommendation distribution can lead to volatility and inefficient price discovery.
Our 12-month forecast assigns a 50% probability to a base case target range of $34-$38, aligned with the analyst average target of $36.83, assuming stable production and margin maintenance. The bull case (30% probability) targets $42-$45, driven by production outperformance and multiple expansion. The bear case (20% probability) targets $12.26-$20, reflecting a severe production downturn and refinancing difficulties. The most likely scenario is the base case, with the key assumption that global vehicle production remains flat to slightly down in 2026 and Garrett maintains its operating margin above 13%.
GTX appears undervalued on multiple metrics: an 11.25x trailing PE, 0.97x price-to-sales, and a PEG ratio of 0.51, which is roughly half the multiple justified by its growth rate. The EV/EBITDA of 8.07x is also moderate for a supplier with a 13.76% operating margin. Compared to the broader market and many industrial peers, GTX trades at a discount, though this discount is partly justified by its negative equity and cyclical exposure. The market is pricing in limited growth and elevated risk, but if Garrett can demonstrate durable free cash flow and debt reduction, the multiple could expand toward the mid-teens, implying significant upside.
GTX presents a favorable risk/reward for value-oriented investors, with a trailing PE of 11.25x and a PEG of 0.51 suggesting deep undervaluation. Analyst targets average $36.83, implying 36.1% upside, and even the lowest target of $34.00 offers 25.6% upside. However, the leveraged balance sheet (negative equity, 0.968 current ratio) and cyclical OEM exposure introduce material risks. The stock is a good buy for investors who can tolerate volatility and have a medium-term horizon, but it is not suitable for those seeking stability or income. A prudent approach would be to accumulate on dips toward the $25 support level, with a stop-loss below $22 to manage downside risk.
GTX is better suited for a medium-to-long-term investment horizon of at least 1-2 years, given its cyclical nature and the time needed for debt reduction and electrified-boosting growth to materialize. The stock's beta of 0.795 indicates lower volatility than the market, but the -30.17% max drawdown shows it can still experience sharp corrections. Short-term trading is possible but risky due to thin analyst coverage and sensitivity to auto production news. The 1.49% dividend yield provides modest income, but the primary return driver is capital appreciation from multiple expansion. A minimum holding period of 12-18 months is recommended to ride out cyclical fluctuations.