Garrett Motion Inc. (GTX): what the price requires
At today's price, Garrett Motion Inc. (GTX) is priced for +11.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/GTX
Headline
| Field | Value |
|---|---|
| Ticker | GTX |
| Company | Garrett Motion Inc. |
| Current price | $31.38/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 8.2% |
| Operating margin today | 11.0% |
| Margin compression implied | -2.8pp |
| Implied growth | 11.1% |
| Multiple paid | 18x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.3pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.44σ |
| cohort percentile (of 210 peers) | 50 |
| sustained it ~5 years at this level | 52% |
| implied end-window share | 0% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | — | 0 | — |
| Earnings | 2.18x | 3 | expensive |
| Relative | 0.82x | 1 | justifies |
| Growth | — | 0 | — |
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 8.2%); the inversion above states its own rate.
Per-Model Detail (n=4)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $46.20 | 0.68x | no | FCF base $0.4B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.2%, 6yr projection |
| DCF Exit Multiple | Growth | $36.30 | 0.86x | no | Exit EV/EBITDA: 293.6x / 295.6x / 297.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $38.20 | 0.82x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.7x / 20.0x / 23.3x (bear / base = reference held flat / bull), EV/EBITDA 28.6x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | — | — | no | — |
| Two-Stage Excess Return | Asset | — | — | no | — |
| Discounted Future Market Cap | Growth | $25.71 | 1.22x | no | Rev $3.7B, growth 7% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.6x / 1.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $59.85 | 0.52x | no | EPS $1.71, growth 35% (input: historical EPS growth), PEG=0.51 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $0.01 | 3138.00x | yes | EBITDA $0.03B × sector EV/EBITDA 13.0x (excluded from median) |
| FCF Yield | Earnings | $14.39 | 2.18x | yes | FCF $380.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $12.83 | 2.45x | yes | SBC-adj FCF $0.35B (FCF $0.38B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $55.18 | 0.57x | yes | EPS $1.71 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $28.66 | 1.09x | no | Revenue $3.69B × sector P/S 1.5x |
| PEG Fair Value | Relative | $64.13 | 0.49x | no | EPS $1.71 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $18.49 | 1.70x | no | EPS $1.71 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.3b |
| Net debt / NOPAT (after-tax) | 3.89x |
| Net debt / operating income (pre-tax) | 3.13x |
| Share count CAGR (dilution) | 31.4% |
| Burning cash | no |
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)
- (no filing in the citation store)
- PHIN (PHINIA INC.)
- (no filing in the citation store)
- VC (VISTEON CORPORATION)
- (no filing in the citation store)
- APTV (APTIV PLC)
- (no filing in the citation store)
- ALV (AUTOLIV, INC.)
- (no filing in the citation store)
- ATMU (Atmus Filtration Technologies Inc.)
- (no filing in the citation store)
- DORM (Dorman Products, Inc.)
- (no filing in the citation store)
- LCII (LCI INDUSTRIES)
- (no filing in the citation store)
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.
Sources
Garrett Q1 2026 results