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Garrett Motion, Inc. (GTX)
:GTX
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Garrett Motion
(NASDAQ:GTX)
54Neutral
Positive Factors
Financial Performance
Garrett Motion (GTX) reported fourth quarter results that underscored the Company’s ability to generate free cash flow.
Market Position
GTX is in an industry with limited competition and highly sophisticated parts, turbochargers, which attach to engines.
Product Development
Investments in new products should lead to sales diversification by late 2025.
Negative Factors
Industry Conditions
Garrett Motion (GTX) reported soft third quarter results in line with the slowdown the automotive industry continues to experience.
Sales Performance
GTX reported lower sales for the first nine months of 2024, leading to an anticipation of difficulty in achieving a slight sequential increase in sales in the fourth quarter due to the sharp decline in the Euro against the US Dollar.
Valuation
GTX’s free cash flow further sustains the low valuation the stock is currently experiencing.
Garrett Motion (GTX) vs. S&P 500 (SPY)
Market Cap
$1.80B
Dividend Yield0.68%
Average Volume (3M)1.47M
Price to Earnings (P/E)7.0
Beta (1Y)0.99
Revenue Growth-10.58%
EPS GrowthN/A
CountryUS
Employees6,600
SectorConsumer Cyclical
Sector Strength64
IndustryAuto - Parts
Share Statistics
EPS (TTM)1.27
Shares Outstanding204,546,900
10 Day Avg. Volume1,879,717
30 Day Avg. Volume1,468,137
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.53
Price to Cash Flow (P/CF)3.50
P/FCF Ratio4.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.00Price Target Upside36.21% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Garrett Motion Business Overview & Revenue Model
Company DescriptionGarrett Motion Inc. (GTX) is a global leader in providing innovative and high-quality turbocharging technologies, electric boosting, and automotive software solutions. The company operates within the automotive industry, focusing on enhancing vehicle performance, fuel efficiency, and reduced emissions across a variety of vehicles including passenger cars, commercial vehicles, and off-highway equipment. Garrett Motion's core products include turbochargers, electric-boosting technologies, and connected vehicle software.
How the Company Makes MoneyGarrett Motion makes money primarily through the sale of its turbocharging and electric boosting products to major automotive manufacturers and suppliers worldwide. The company's turbochargers are integral components in both internal combustion and hybrid vehicle engines, helping improve engine efficiency and performance. Garrett Motion also earns revenue through the licensing and sale of automotive software solutions that enhance vehicle connectivity and performance management. Key revenue streams include direct sales to OEMs (Original Equipment Manufacturers), aftermarket sales, and service agreements. Partnerships with leading automotive brands and innovation in electric and hybrid vehicle technologies significantly contribute to Garrett Motion's earnings.
Garrett Motion Financial Statement Overview
Summary
Garrett Motion faces challenges with profitability and balance sheet stability. Despite strong operational cash generation and gross profit margins, negative equity and high liabilities pose substantial financial risks. Inconsistent revenue growth and operational profitability further underscore the need for cautious financial management.Income Statement
Garrett Motion's recent performance shows challenges in maintaining profitability. The company's gross profit margin for the latest period is 100%, suggesting efficient cost management at the gross level. However, the net profit margin is negatively influenced by significant expenses, as indicated by a negative EBIT margin of -1.84% and EBITDA margin of -1.84%. Revenue growth has been inconsistent, with the TTM period showing a sharp decline in revenue compared to the prior year. Overall, while there are some strengths in gross profit, the operational profitability and revenue growth are areas of concern.45
Neutral
Balance Sheet
The balance sheet reveals substantial financial stress, with a negative stockholders' equity, indicating potential solvency issues. The debt-to-equity ratio is not applicable due to negative equity, but the company appears to have managed its debt levels, with total debt significantly reduced in the latest period. However, the equity ratio is negative, reflecting liabilities exceeding assets, which is a significant risk. The company's return on equity cannot be assessed due to negative equity. Overall, the financial stability is concerning with high leverage and negative equity.30
Negative
Cash Flow
Cash flow analysis shows some positive aspects, with strong operating cash flow relative to net income, indicating good cash generation from operations. The free cash flow growth rate is positive, reflecting improved cash management, although this is partly offset by significant financing outflows. The free cash flow to net income ratio is strong, further underscoring effective cash conversion. Despite these strengths, the cash flow statement is impacted by substantial financing cash outflows, which could affect future liquidity.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 705.00M | 3.89B | 3.60B | 3.63B | 3.03B | Gross Profit |
| 705.00M | 756.00M | 683.00M | 707.00M | 556.00M | EBIT |
| -13.00M | 307.00M | 586.00M | 506.00M | 281.00M | EBITDA |
| 593.00M | 597.00M | 588.00M | 596.00M | 279.00M | Net Income Common Stockholders |
| 282.00M | 261.00M | 390.00M | 495.00M | 80.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 125.00M | 259.00M | 246.00M | 423.00M | 592.00M | Total Assets |
| 2.28B | 2.53B | 2.64B | 2.71B | 3.02B | Total Debt |
| 7.00M | 1.69B | 1.16B | 1.19B | 1.67B | Net Debt |
| -118.00M | 1.43B | 909.00M | 765.00M | 1.08B | Total Liabilities |
| 2.95B | 3.26B | 2.75B | 3.17B | 5.33B | Stockholders Equity |
| -673.00M | -735.00M | -116.00M | -468.00M | -2.31B |
| Cash Flow | Free Cash Flow | |||
| 408.00M | 382.00M | 284.00M | -382.00M | -55.00M | Operating Cash Flow |
| 408.00M | 465.00M | 375.00M | -310.00M | 25.00M | Investing Cash Flow |
| -14.00M | -55.00M | -91.00M | -71.00M | -80.00M | Financing Cash Flow |
| -520.00M | -403.00M | -482.00M | 139.00M | 530.00M |
Garrett Motion Technical Analysis
Positive
8.81
Price Trends
9.05
Negative
8.99
Negative
8.59
Positive
Market Momentum
-0.28
Positive
30.24
Neutral
13.50
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GTX, the sentiment is Positive. The current price of 8.81 is above the 20-day moving average (MA) of 8.49, below the 50-day MA of 9.05, and above the 200-day MA of 8.59, indicating a neutral trend. The MACD of -0.28 indicates Positive momentum. The RSI at 30.24 is Neutral, neither overbought nor oversold. The STOCH value of 13.50 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GTX.
Garrett Motion Risk Analysis
Garrett Motion disclosed 31 risk factors in its most recent earnings report. Garrett Motion reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Garrett Motion Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $512.55M | 9.38 | 22.04% | 5.32% | 0.06% | 137.74% | |
70 Outperform | $1.84B | 6.94 | 24.17% | ― | -2.23% | -42.94% | |
64 Neutral | $1.51B | 21.55 | 4.57% | 2.65% | -2.77% | -26.95% | |
59 Neutral | $11.48B | 10.33 | -0.84% | 4.02% | 1.25% | -16.06% | |
57 Neutral | $1.55B | ― | -3.92% | 3.71% | -2.57% | -248.28% | |
54 Neutral | $1.80B | 7.00 | -41.90% | 0.68% | -10.58% | ― | |
54 Neutral | $1.65B | ― | -2.44% | ― | 9.07% | 79.21% |
* Consumer Cyclical Sector Average
Performance Comparison
GTX
Garrett Motion
8.81
-0.46
-4.96%
DAN
Dana Holding
10.79
-0.72
-6.26%
PLOW
Douglas Dynamics
22.51
1.86
9.01%
VC
Visteon
68.11
-40.60
-37.35%
HSAI
Hesai Group Sponsored ADR
12.21
7.75
173.77%
PHIN
PHINIA Inc.
38.47
2.80
7.85%
Garrett Motion Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -4.96% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Garrett's strong operational performance and strategic initiatives, such as share repurchases and expansion in China. However, challenges like sales softness in the light vehicle industry and negative foreign exchange impacts were also noted.Highlights
Strong Q4 Operating Performance
Garrett delivered an adjusted EBITDA of $153 million with a margin of 18.1%, an increase of 280 basis points compared to Q4 2023.
Share Repurchase and Dividend Program
The company repurchased $296 million of common stock in 2024, reducing the share count by 13% compared to the end of 2023. A new $250 million share repurchase program and $50 million in dividends are planned for 2025.
Expansion in China
Garrett secured new business with Chinese OEMs, focusing on plug-in hybrids and range extenders, strengthening their market position in the region.
Introduction of Adjusted EBIT Metric
Garrett will use adjusted EBIT as a new financial metric, reporting $485 million for the full year 2024, achieving a margin of 14%.
Lowlights
Sales Softness in Light Vehicle Industry
Garrett experienced continuous sales softness due to weak light vehicle industry performance in Europe and China.
Foreign Exchange Impact
Unfavorable foreign exchange, mainly driven by U.S. dollar appreciation, negatively impacted adjusted EBITDA by $23 million in 2024.
Projected Revenue Decline for 2025
The 2025 outlook includes a net sales growth at constant currency of minus 1%, indicating expected continued softness in the light vehicle industry.
Company Guidance
In their fourth quarter and full year 2024 financial results call, Garrett Motion provided guidance for 2025 with several key metrics. They projected net sales at around $3.4 billion, reflecting a slight decline of 1% in sales growth at constant currency. The company expects net income of $232 million, adjusted EBITDA of $575 million, and adjusted EBIT of $457 million. Garrett Motion anticipates generating $402 million in net cash from operating activities, with adjusted free cash flow projected at $345 million. The company plans to continue executing productivity gains and passing through pricing adjustments. Additionally, Garrett Motion aims to invest 4.6% of sales in R&D, focusing over 50% of this spending on zero-emission technologies. They also announced a new $250 million share repurchase program for 2025 and expect to pay $50 million in dividends throughout the year.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.