Reassessing Garrett Motion (GTX) Valuation After Strong Recent Share Price Momentum

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With no single headline event setting the tone, Garrett Motion (GTX) has still drawn attention after a period of notable share price moves and reported revenue and net income figures.

The stock recently closed at US$21.25, with reported annual revenue of US$3.54b and net income of US$326.0m. For investors, that combination of current price and existing financial scale helps frame the next questions around valuation and risk.

See our latest analysis for Garrett Motion.

Short term share price momentum has been firm, with a 1-day share price return of 3.16% and a 90-day share price return of 29.10%. The 1-year total shareholder return of 134.51% points to strong longer term gains that investors may now be reassessing against current fundamentals.

If Garrett Motion’s run has you thinking about where else momentum could show up next, it might be worth scanning our screener of 25 power grid technology and infrastructure stocks as another way to source ideas.

With Garrett Motion trading just above its analyst price target yet flagged with a sizeable intrinsic discount, the key question is whether the current US$21.25 represents a bargain or whether the market is already pricing in future growth.

Garrett Motion’s most followed narrative places fair value at about $21.20, almost exactly in line with the recent $21.25 close, which puts the focus on what is driving that estimate.

The company secured over $1 billion of long-term light vehicle turbo program extensions and new business wins for hybrid/extended range electric vehicles, significantly increasing forward visibility on future revenues despite industry-wide electrification uncertainty.

Read the complete narrative.

Curious how steady mid single digit revenue growth, small margin shifts, and a modestly higher future earnings multiple all add up to that valuation call? The full narrative spells out exactly which earnings path and profit profile need to line up for Garrett Motion to justify that price tag.

Result: Fair Value of $21.20 (OVERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, there are still watchpoints, including Garrett Motion’s heavy exposure to gasoline and diesel turbochargers and the risk that newer zero emission products may not scale quickly enough.

Find out about the key risks to this Garrett Motion narrative.

That 20% overvalued narrative sits awkwardly next to our DCF work. The SWS DCF model places fair value closer to $40.44 per share, which is a very large gap versus the current $21.25 price and flags a very different risk reward trade off for you to think about.

Look into how the SWS DCF model arrives at its fair value.

If you view Garrett Motion differently or simply prefer to rely on your own analysis, you can quickly create a custom perspective on the numbers and narrative at Do it your way.

A great starting point for your Garrett Motion research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

If Garrett Motion has sharpened your appetite for opportunities, do not stop here. Use the screener to line up your next set of potential candidates.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include GTX.

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