Garrett Motion Inc. (GTX): what the price assumes

In the published model solve dated 2026-Q2, anchored at $26.66, Garrett Motion Inc. (GTX) is priced for +5.9% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/GTX

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

The price is justified by relative-multiple; earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.

Per-Model Detail (n=4)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Garrett Motion makes turbochargers and is using the cash they throw off to shrink its own share count, repurchasing $87 million of stock in the first quarter while also paying a small dividend.
• The defining tension is electrification: the price assumes about 13% annual operating-profit growth for five years, but the 10-K itself warns demand may shift away from the vehicle types where its turbos are used.
• The near-term signal is content wins on hybrids and range-extended electric vehicles, which Garrett reported alongside 12% sales growth and a raised 2026 outlook, because hybrid turbo content is what keeps the business relevant as pure combustion fades.

Bull Case

Watch where Garrett sends its cash, because a company that buys back stock aggressively while its end market is supposedly dying is telling you it does not believe the obituary. In the first quarter alone Garrett repurchased $87 million of its own shares and declared an $0.08 per-share dividend. That is meaningful capital return for a company of this size, and it is funded by the cash a mature turbocharger business generates, not by borrowing. Management is choosing to concentrate ownership at today's price, which is the action of a team that thinks the market is underrating the durability of its franchise.

The reason that confidence has a foundation is that the turbo is migrating into the vehicles that are actually winning, not just the ones being phased out. Garrett reported new turbo program wins including variable-geometry turbos for hybrids and range-extended electric vehicles, plus E-Powertrain awards and growing industrial engagement for its E-Cooling solutions. The 10-K frames this as investing in "innovative technologies that address the needs of our customers in the ongoing auto industry transformation," and notes the company expects turbos to apply to "REEV and fuel-cell based vehicles in the medium-term as OEMs seek to reduce emissions from their existing product portfolios." A hybrid still has an engine, and an engine that has to be small and efficient is exactly where a turbocharger earns its keep. The bull case is that electrification is not the end of the turbo; it is a reshuffling that keeps Garrett's content on a large and growing share of new vehicles.

The recent results back the patience. First-quarter net sales rose 12% to $985 million, net income was $95 million at a 9.6% margin, and the company raised its full-year 2026 outlook. There is also an aftermarket layer: turbochargers wear and get replaced, which gives Garrett a recurring revenue stream independent of new-vehicle cycles. A profitable, cash-returning company winning content on hybrids while the market prices it for decline is the bull thesis in one line.

Bear Case

The bear case is the oldest one in auto suppliers, with an electric twist: these may be peak earnings for a product whose addressable market is structurally shrinking. The turbocharger exists to make internal combustion engines more efficient, and the long arc of the industry is toward fewer combustion engines. Garrett's own 10-K says it directly, warning that "demand may shift away from the types of vehicles where our turbo" products are used. Every hybrid win the bull case celebrates is also an admission that the pure-combustion base, the highest-volume home for turbos, is eroding. A price that embeds roughly 13% annual operating-profit growth for five years is betting that the hybrid and industrial transition more than replaces that erosion, and only about 48% of comparable companies sustained that kind of growth even five years.

The second pressure is the cyclicality and concentration of the customer base. Garrett sells to global automakers, and the 10-K is candid that if the industry environment "deteriorates, our financial position and results of operations could be adversely affected," adding that "economic downturns, could adversely affect our business." Auto production is one of the more cyclical industrial end markets, tariffs and trade policy add a layer of unpredictability to a globally sourced supply chain, and a supplier selling to a handful of large OEMs has limited pricing power when those customers push for cost downs. The company even noted that growth expectations across some applications have shifted toward later years, which is the polite way of saying the near-term demand is not as firm as the raised guidance implies.

Leverage frames the downside. Net debt of roughly $1.3 billion runs at about three times operating income, and the company emerged from a Chapter 11 reorganization with a capital structure that included preferred stock, which is part of why the share count has moved so much. Debt on a cyclical supplier in a secularly transitioning market is a real constraint: in a downturn, the earnings fall while the debt does not, and the buybacks that look value-accretive today compete with the need to keep the balance sheet safe. The earnings are real, but the bear case is that a low multiple on a turbo maker is the market pricing the slow decline of the engine, and no amount of hybrid wins fully escapes that arithmetic.

Valuation

Garrett trades at about 19 times company-wide operating income, and inverting that price says the market is paying for roughly 13% annual operating-profit growth over five years. The current operating margin near 11% is already above the roughly 9% the price implies it needs to sustain, so this is not a margin-expansion bet; it is a growth-and-durability bet, specifically that a turbocharger franchise grows operating profit at a healthy clip even as the combustion-engine base it was built on slowly shrinks.

The valuation methods are thin here, and what they show is a stock caught between two readings. The earnings-power methods read the price as expensive, more than double where they land, because they capitalize current earnings without crediting the content-migration story. The peer-multiple lens, by contrast, places Garrett roughly in line with comparable auto-parts companies, slightly below where the cohort trades. So the price is defensible against peers but rich against a static read of its own earnings, which is the signature of a company the market is unsure how to classify: a melting-ice-cube combustion supplier, or a transitioning electrification and industrial play. The peer comparison is the more useful anchor, and it says Garrett is priced about where the auto-supplier group sits, leaving the upside dependent on the transition story rather than on a re-rating.

Solvency is the boundary on the downside. Net debt of about $1.3 billion at roughly three times operating income is serviceable while the business is profitable and generating cash, but it is leverage on a cyclical supplier, and interest coverage is not cleanly computable from the latest filings, which argues for caution rather than comfort. The offsetting positive is the capital return: $87 million of buybacks and a dividend in a single quarter show management converting cash to shareholders rather than hoarding it. A buyer at this price is underwriting the turbocharger's relevance through the electrification transition, paying a peer-level multiple, and counting on the aftermarket and hybrid content to carry growth while the buybacks compound the per-share math. The methods say the price needs the transition story to be true; the leverage says do not be wrong about the cycle.

Catalysts

Garrett opened 2026 with a strong quarter and a raised outlook. First-quarter net sales rose 12% to $985 million, up 6% in constant currency, net income was $95 million at a 9.6% margin, and GAAP earnings per share of $0.49 beat estimates. The company lifted full-year 2026 guidance to a GAAP net-sales range of $3.6 to $3.9 billion, a sign management saw the demand environment firming rather than fading.

The capital-return cadence is a catalyst in its own right. Garrett repurchased $87 million of stock in the quarter and declared an $0.08 per-share dividend payable in mid-June. For a stock the market prices for decline, the pace of future buybacks is a direct signal of management's conviction and a mechanical driver of per-share earnings, so the repurchase run-rate is worth tracking each quarter.

The developments that move the fundamental story are the content wins on hybrids, range-extended electric vehicles, and industrial applications, where Garrett reported multiple gasoline turbo awards and E-Powertrain and E-Cooling traction, against the pace of pure-electric adoption that shrinks the combustion base. The trajectory of global auto production and any tariff or trade-policy shifts that hit a globally sourced supply chain are the external swing factors. The next quarterly report will show whether the raised guidance holds and whether the electrification content is scaling fast enough to offset the combustion fade the company itself flags.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• BWA (BORGWARNER INC)
• FY2025 10-K: …participant. • Operating income (loss) margin: The Company used historical and expected operating income (loss) margins, which may vary based on the projection of the reporting unit being evaluated. • Revenue growth rates: The Company used a global automotive market industry growth rate forecast adjusted to estimate…
• FY2025 10-K: …growth strategy. The automotive supply market in China is highly competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers. As the Chinese market evolves, market participants have acted, and we anticipate will continue to act aggressively to increase or…
• PHIN (PHINIA INC.)
• FY2025 10-K: …to our customers. We rely on sales to OEMs around the world of varying credit quality and manufacturing demands. Supply to several of these customers requires significant investment by us. We base our growth projections, in part, on commitments made by our customers. These commitments by OEMs generally renew yearly…
• FY2025 10-K: , our competitive position and business, financial condition and results of operations could be adversely impacted. In addition, if the market adoption for electric vehicles (particularly light and medium duty commercial vehicles) grows faster than expected, or if authorities implement additional, more stringent or…
• VC (VISTEON CORPORATION)
• FY2025 10-K: …In addition, certain customers have communicated an intent to manufacture components internally that are currently produced by outside suppliers, such as the Company. If the Company's OEM customers successfully insource products currently manufactured by the Company, the discontinuation or loss of business for…
• FY2025 10-K: …that gain greater customer or consumer acceptance, which could have a material adverse effect on the future growth of the Company. The automotive industry is cyclical and significant declines in the production levels of the Company's major customers could reduce the Company's sales and harm its profitability Demand…
• APTV (APTIV PLC)
• FY2025 10-K: …taking steps to reduce or restructure their operations in China. For example, in 2025, General Motors ("GM") restructured their operations in China given challenges in the Chinese market. As GM, along with other traditional OEMs, are among our largest customers, our business and financial results may be adversely…
• FY2025 10-K: 702; Driving more than 75% of new business awards in China with local OEM customers; • Delivering record revenue, with strong revenue growth over the prior year despite the dynamic vehicle production environment, helped by strong growth in other industrial end markets; • Successfully mitigating substantially all…
• ALV (AUTOLIV, INC.)
• FY2025 10-K: …see "Risk Factors - The cyclical nature of automotive sales and production can adversely affect our business, operating results, and financial condition. Our business is directly related to LVP in the global market and by our customers, and automotive sales and LVP are the most important drivers for our sales" in…
• FY2025 10-K: …results are regularly reviewed by the CEO/CODM to allocate resources and assess performance. Additionally, as Autoliv supplies customers on a global basis it also manages the business on a global basis. Therefore, based on the above analysis, the Company has concluded that the Company is the single operating and…
• ATMU (Atmus Filtration Technologies Inc.)
• FY2025 10-K: …many of our customers and suppliers have unionized work forces. Work stoppages or slowdowns experienced by us, our customers or suppliers could result in slowdowns or closures that would have a material adverse effect on our business, financial condition, results of operations or cash flows. Our products are exposed…
• FY2025 10-K: …our strategy for growth, product development activities, regulatory approvals, market position, expenditures and the effects of the Separation and IPO (each as defined in Note 1, Description of the Business , to our Consolidated Financial Statements included herein). These statements are not guarantees of future…
• DORM (Dorman Products, Inc.)
• FY2025 10-K: . If and when we meet these customer demands, they adversely impact our operating margins and profitability and could have a material adverse effect on our business, financial condition, and results of operations. Our industry faces intense price competition, and our success depends on maintaining a competitive cost…
• FY2025 10-K: …and by improvements in the quality of new vehicle parts. The size of the motor vehicle aftermarket industry depends on factors such as the number of vehicles on the road, average vehicle age, change in total miles driven, regulatory changes, pricing of new and used vehicles, vehicle and component quality and…
• LCII (LCI INDUSTRIES)
• FY2025 10-K: …a strong foundation for resilience and growth. Additionally, we are actively gaining share in critical markets through ongoing investment in innovation and operational excellence. We underpin this strategy with disciplined cost management, streamlining operations, and enhancing efficiency. For example, during the…
• FY2025 10-K: …OEMs in Adjacent Industries during 2025 was primarily due to sales from acquired businesses and higher sales to North American utility trailer OEMs. 28 Operating profit of the OEM Segment was $184.1 million in 2025, an increase of $77.0 million compared to 2024. The operating profit margin of the OEM Segment…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.