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Garrett Motion (GTX)
NASDAQ:GTX
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Garrett Motion
(NASDAQ:GTX)
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Rating:63Neutral
Price Target:
$22.00
▲(8.06% Upside)
Action:ReiteratedDate:02/19/26
GTX scores moderately: strong technical momentum and a constructive earnings outlook with solid cash generation and capital returns are the key positives. These are meaningfully offset by elevated financial risk from a structurally weak balance sheet (persistent negative equity and high debt) and some earnings-quality volatility.
Positive Factors
Cash generation and FCF conversion
GTX has sustained strong operating cash flow since 2022 with free cash flow converting roughly 78–84% of net income. This durable cash generation funds disciplined capex, dividends and large share repurchases and supports liquidity ($807M) and shareholder returns without reliance on new equity.
Clear R&D focus on zero-emission technologies
Management allocates meaningful R&D (≈4.2% of sales) with roughly half toward zero-emission and industrial cooling solutions. That structural commitment underpins product diversification (E-Cooling, e-powertrain) and positions GTX to capture growing non-ICE vehicle and industrial cooling content over the coming years.
Market-share wins and OEM production awards
A track record of win rates above 50% and recent production awards across gasoline, hybrid and range-extended EV platforms indicate durable OEM relationships and content gains. Consistent design wins translate into multi-year revenue streams and scale benefits in core turbo and electrified boosting markets.
Negative Factors
Structurally weak balance sheet
Persistent negative equity and multi-hundred-million dollar debt levels materially constrain financial flexibility. With a thin capital cushion, GTX is more exposed to demand shocks, limiting ability to absorb cyclical downturns or fund aggressive investments without increasing leverage or diluting shareholders.
Earnings-quality volatility below operating line
The gap between positive EBITDA and negative reported EBIT reflects material depreciation, amortization or other non-operating pressures that can make reported earnings volatile. This reduces predictability of accounting profits and complicates covenant metrics, forecasting and long-term planning.
Cyclicality and aftermarket softness exposure
GTX's end markets remain cyclical: management models a modest industry decline and cites persistent aftermarket softness. Because OEM volumes and aftermarket parts drive sales, downturns or weaker replacement demand can rapidly depress revenues and stress a leveraged balance sheet, amplifying downside risk.
Garrett Motion (GTX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.87B
Dividend Yield1.49%
Average Volume (3M)2.41M
Price to Earnings (P/E)13.4
Beta (1Y)1.17
Revenue Growth-1.09%
EPS Growth56.16%
CountryUS
Employees6,600
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)0.43
Shares Outstanding189,971,050
10 Day Avg. Volume2,793,374
30 Day Avg. Volume2,412,131
Financial Highlights & Ratios
PEG Ratio0.51
Price to Book (P/B)-4.34
Price to Sales (P/S)0.97
P/FCF Ratio10.21
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue1.48
Enterprise Value/Gross Profit6.02
Enterprise Value/Ebitda8.87
Forecast
1Y Price Target
$22.67Price Target Upside11.35% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)1.77
Revenue Forecast (FY)$3.70B
Garrett Motion Business Overview & Revenue Model
Company DescriptionGarrett Motion Inc., together with its subsidiaries, designs, manufactures, and sells turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers worldwide. The company offers light vehicle gasoline and diesel, and commercial vehicle turbochargers; and provides automotive software solutions. It offers its products in the aftermarket through distributors. Garrett Motion Inc. was incorporated in 2018 and is headquartered in Rolle, Switzerland.
How the Company Makes MoneyGarrett Motion generates revenue primarily through the sale of its turbochargers and electric boosting solutions to OEMs and aftermarket customers in the automotive industry. The company leverages its extensive R&D capabilities to develop cutting-edge technologies that meet the evolving demands for fuel efficiency and emission reductions, which are critical in the current regulatory environment. Key revenue streams include long-term supply agreements with major automotive manufacturers and the sale of replacement parts and services in the aftermarket. Additionally, strategic partnerships with OEMs for joint development projects and collaborations on emerging technologies contribute to its earnings, as these alliances often lead to increased sales and market penetration.
Garrett Motion Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational and financial performance in 2025 (robust sales, healthy margins, very strong free cash flow and disciplined capital returns) alongside accelerating diversification into zero-emission and industrial cooling markets with meaningful partnerships (Trane) and production awards. Offsetting these positives were near-term headwinds: Q4 margin dilution from unfavorable mix and one-time charges, aftermarket softness (notably North America), regional gasoline/diesel volume weakness (Asia and Europe), and exposure to a modestly down global light-vehicle industry. On balance the operational strength, cash generation, share gains, technology wins and clear multi-year growth avenues materially outweigh the cited short-term challenges.Q4-2025 Updates
Positive Updates
Strong Full-Year Financial Performance
Full-year 2025 net sales of $3.58 billion and adjusted EBIT of $510 million representing a 14.2% adjusted EBIT margin; adjusted free cash flow for the year was $403 million, with free cash flow conversion near 80%.
Robust Q4 Results
Q4 2025 net sales of $891 million and adjusted EBIT of $122 million with a 13.7% margin; adjusted free cash flow in the quarter was $139 million.
2026 Financial Outlook and Margin Expansion
2026 midpoint guidance: net sales $3.7 billion, net income $315 million, adjusted EBIT $545 million (14.7% margin, +50 bps vs 2025 midpoint), net cash from operations $455 million and adjusted free cash flow $405 million; margin improvement expected from higher volumes and productivity.
Exceptional Cash Generation and Capital Returns
Strong liquidity position of $807 million at year-end; net leverage ~1.9x after voluntary $50 million term loan repayment; returned capital via $208 million share repurchases and $52 million dividends in 2025; authorized $250 million repurchase program for 2026; targeting ≈75% of adjusted FCF to shareholders over time.
Market Share Gains and Product Awards
Continued share-of-demand gains in light vehicle turbos (noted historical win rate >50%); secured significant new light-vehicle turbo awards (gasoline VNT, hybrid and range-extended EV platforms) and important diesel awards for light commercial vehicles and trucks; first series production awards for largest turbo frame (MEG) including aftermarket retrofit sales.
Diversification and Commercial Traction in Zero-Emission & Industrial Technologies
Strategic collaboration with Trane Technologies for oil-free, high-speed centrifugal compressors for commercial HVAC; first series production award with leading Chinese bus and truck HVAC supplier; announced E-Powertrain production awards (heavy-duty electric axle production beginning early 2027); industrial cooling (E-Cooling) expected to scale to >5% of revenue by end of decade.
Technology Performance Claims
E-Cooling oil-free centrifugal compressors demonstrated >10% real-world energy savings vs incumbent solutions in testing; product range covers 7–500 tonnes (25–1,750 kW) enabling multiple industrial and data center cooling applications.
Disciplined Capital Allocation and Controlled CapEx
2026 CapEx guidance of ~2.5% of sales and RD&E ~4.2% of sales with ~50% of RD&E directed to zero-emission technologies and industrial cooling; management states E-Cooling-related CapEx is included in the 2.5% guidance and will be disciplined.
Negative Updates
Q4 Sequential Margin Pressure and One-Time Headwinds
Q4 adjusted EBIT margin declined by ~100 basis points sequentially driven by unfavorable product mix and one-time headwinds; tariffs diluted margin by ~20 basis points in Q4.
Aftermarket Weakness
Continued aftermarket softness, particularly in North America and off-highway applications, contributed to unfavorable mix and lower sales in parts of the business.
Regional Volume Weakness
Gasoline volumes declined outside Europe, notably in Asia; diesel demand was weak in Europe contributing to full-year and quarterly headwinds in certain segments.
Exposure to Industry Downturn
Management's 2026 industry assumptions include a 2% decline in global light vehicle volumes and 19% BEV penetration, creating a macro backdrop that could pressure end-market demand despite Garrett's expected share gains.
Tariff Impacts and Recoveries
Tariff effects affected performance during the year (company recovered $10 million in Q4 and $40 million for the full year), indicating prior tariff-related headwinds and some recovery but ongoing sensitivity to trade measures.
Q4 Reported Mix Shift
Unfavorable product mix in Q4 driven by growth in small-engine light vehicle diesel and softness in aftermarket, partially offset by commercial vehicle strength, which contributed to margin decline.
Company Guidance
Garrett's 2026 guidance midpoint assumes a modest industry backdrop (global light-vehicle units -2%, BEV penetration ~19%, commercial vehicle +1.5%) and implies net sales of $3.7 billion, net income of $315 million and adjusted EBIT of $545 million (14.7% margin, +50 bps vs. 2025), with net cash provided by operating activities of $455 million and adjusted free cash flow of $405 million. Management expects margin expansion driven primarily by higher volumes and continued productivity that will offset unfavorable pricing, net inflation and mix; capital expenditures are guided at 2.5% of sales and RD&E at 4.2% of sales (with ~50% of RD&E toward zero-emission technologies and industrial cooling). The firm reiterated its capital-allocation framework—targeting distribution of ~75% of adjusted free cash flow to shareholders—authorized a $250 million repurchase program for 2026 and declared a $0.08 per share Q1 dividend, while closing 2025 with $807 million of liquidity, net leverage of ~1.9x, FY2025 net sales $3.58 billion, adjusted EBIT $510 million (14.2%), and adjusted free cash flow $403 million (≈80% conversion).Garrett Motion Financial Statement Overview
Summary
Operating profitability and cash generation are supportive (stable gross margin ~25–26%, EBITDA margin ~15–20%, and positive OCF/FCF in 2022–TTM with ~78–84% FCF-to-net-income conversion), but the balance sheet is a major risk with persistently negative equity and sizable debt, limiting financial flexibility and raising downside sensitivity. TTM also shows negative reported EBIT despite positive EBITDA, adding earnings-quality volatility.Income Statement
GTX shows solid underlying profitability in recent periods with stable gross margin (~25–26%) and healthy EBITDA margin (~15–20%) across the cycle. Revenue has been choppy (down in 2023–2024, then up modestly in TTM (Trailing-Twelve-Months)), but net profit margin has improved from low single-digits in 2020 to ~8–9% in 2024 and TTM. The key concern is volatility below the operating line: despite a positive EBITDA in TTM, reported EBIT is negative, signaling pressure from depreciation/amortization and/or other operating items that can make earnings quality less predictable.56
Neutral
Balance Sheet
The balance sheet is the weakest pillar. Stockholders’ equity is negative in every reported year (including TTM (Trailing-Twelve-Months)), which limits financial flexibility and makes leverage risk structurally higher even when earnings are positive. Total debt remains large (roughly $1.4–$1.7B over the period) and has come down from 2023 to TTM, but negative equity still implies a thin capital cushion if demand weakens. Total assets are relatively stable, yet the persistent equity deficit is a material overhang for valuation and risk.28
Negative
Cash Flow
Cash generation is generally a strength post-2021. Operating cash flow rebounded strongly after a negative 2021 and has been consistently positive from 2022 through TTM (Trailing-Twelve-Months), with free cash flow also positive in 2022–TTM. Cash conversion is decent: in 2024 and TTM, free cash flow is roughly 78–84% of net income, suggesting earnings are translating into cash. The main weakness is volatility in the growth of free cash flow (down in 2024 and sharply down in TTM versus the prior period), indicating cash generation can swing meaningfully with cycle/working-capital dynamics.63
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.58B | 3.48B | 3.89B | 3.60B | 3.63B |
| Gross Profit | 878.00M | 889.00M | 908.00M | 840.00M | 859.00M |
| EBITDA | 596.00M | 590.00M | 597.00M | 664.00M | 724.00M |
| Net Income | 310.00M | 282.00M | 261.00M | 390.00M | 495.00M |
Balance Sheet | |||||
| Total Assets | 2.37B | 2.28B | 2.53B | 2.64B | 2.71B |
| Cash, Cash Equivalents and Short-Term Investments | 179.00M | 126.00M | 260.00M | 248.00M | 464.00M |
| Total Debt | 1.51B | 1.52B | 1.69B | 1.20B | 1.63B |
| Total Liabilities | 3.17B | 2.95B | 3.26B | 2.75B | 3.17B |
| Stockholders Equity | -802.00M | -673.00M | -735.00M | -116.00M | -468.00M |
Cash Flow | |||||
| Free Cash Flow | 341.00M | 317.00M | 382.00M | 284.00M | -382.00M |
| Operating Cash Flow | 413.00M | 408.00M | 465.00M | 375.00M | -310.00M |
| Investing Cash Flow | -41.00M | -14.00M | -55.00M | -91.00M | -71.00M |
| Financing Cash Flow | -326.00M | -520.00M | -403.00M | -482.00M | 139.00M |
Garrett Motion Technical Analysis
Positive
20.36
Price Trends
18.60
Positive
17.14
Positive
14.53
Positive
Market Momentum
0.51
Positive
59.51
Neutral
71.23
Neutral
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 20.36 is above the 20-day moving average (MA) of 19.59, above the 50-day MA of 18.60, and above the 200-day MA of 14.53, indicating a bullish trend. The MACD of 0.51 indicates Positive momentum. The RSI at 59.51 is Neutral, neither overbought nor oversold. The STOCH value of 71.23 is Neutral, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $10.38B | 17.10 | 35.42% | 1.07% | -4.21% | -0.45% | |
72 Outperform | $6.66B | 16.10 | 9.21% | 2.63% | -1.90% | -13.86% | |
72 Outperform | $2.57B | 13.14 | 14.37% | 0.57% | -4.03% | -39.51% | |
68 Neutral | $2.75B | 22.40 | 8.23% | 1.77% | -0.72% | -4.90% | |
63 Neutral | $3.87B | 13.37 | ― | 1.49% | -1.09% | 56.16% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $4.00B | 53.85 | -2.12% | 1.70% | -18.23% | ― |
* Consumer Cyclical Sector Average
GTX
Garrett Motion
20.36
10.87
114.54%
ALSN
Allison Transmission Holdings
125.30
27.63
28.29%
DAN
Dana Incorporated
34.24
20.36
146.63%
LEA
Lear
131.25
42.59
48.04%
VC
Visteon
95.67
11.96
14.29%
PHIN
PHINIA Inc.
72.63
26.07
55.99%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.