Garrett Motion Inc. (GTX) Stock Analysis
Garrett Motion Inc. (GTX) Stock Analysis
Overall Grade: F (Concerning)
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Garrett Motion Inc. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 55.8% | Above industry average |
| FCF Margin | 9.5% | Healthy cash flow |
| Debt/Equity | -1.8x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 55.8% suggests durable competitive advantages and efficient capital allocation.
What is Garrett Motion Inc.'s Profitability and ROIC?
Garrett Motion Inc. generates strong returns on invested capital at 55.8%, indicating efficient capital allocation and competitive advantages. Gross margin of 20.4% with operating margin at 13.7% reflects the company's moderate market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 55.8% | Excellent | Strong capital efficiency |
| Return on Equity (ROE) | -40.5% | Red flag | Moderate equity returns |
| Gross Margin | 20.4% | Adequate | Competitive pricing environment |
| Operating Margin | 13.7% | Good | Moderate operational efficiency |
How Strong is Garrett Motion Inc.'s Cash Flow Quality?
Garrett Motion Inc. generated $341.0M in free cash flow over the trailing twelve months, representing a 9.5% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.3x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 9.5% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $341.0M | Good | Positive cash generation |
| OCF/Net Income | 1.3x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is Garrett Motion Inc.'s Financial Health?
Garrett Motion Inc.'s debt-to-equity ratio of -1.8x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | -1.8x | Excellent | Conservative capital structure |
| Net Cash Position | $-1.2B | Warning | Net debt position |
Is Garrett Motion Inc. Stock Overvalued or Undervalued?
Garrett Motion Inc. trades at a P/E of 11.2x, representing a premium to the sector median of N/A. Free cash flow yield of 9.8% offers attractive cash returns.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 11.2x | Adequate | Reasonable valuation |
| EV/Sales | 1.3x | Excellent | Attractive revenue multiple |
| FCF Yield | 9.8% | Excellent | Attractive cash return |
| Dividend Yield | 1.5% | Adequate | Growth focus over income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 55.8% | Top 5% | 7.0x above |
| Free Cash Flow Margin | 9.5% | Top 50% | 1.8x above |
| Gross Margin | 20.4% | Bottom 25% | 0.6x below |
| Operating Margin | 13.7% | Top 50% | 1.7x above |
| Return on Equity (ROE) | -40.5% | Top 5% | -4.5x below |
| P/E Ratio | 11.2x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 55.8% (Excellent - Top 5% of sector (median: 8.0%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 9.5% (Adequate - Top 50% of sector (median: 5.4%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 20.4% (Adequate - Bottom 25% of sector (median: 33.4%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: -176.8% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 11.2x (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 9.8% (Excellent)
Frequently Asked Questions
Q: What is Garrett Motion Inc.'s Return on Invested Capital (ROIC)?
Garrett Motion Inc. (GTX) has a trailing twelve-month Return on Invested Capital (ROIC) of 55.8%. This compares above the sector median of 8.0%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is Garrett Motion Inc.'s Free Cash Flow Margin?
Garrett Motion Inc. (GTX) has a free cash flow margin of 9.5%, generating $341.0 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is Garrett Motion Inc. stock overvalued or undervalued?
Garrett Motion Inc. (GTX) trades at a P/E ratio of 11.2x, which is above the sector median of N/A. The EV/Sales multiple is 1.3x. Free cash flow yield is 9.8%, which represents an attractive cash return to investors.
Q: Does Garrett Motion Inc. pay a dividend?
Garrett Motion Inc. (GTX) currently pays a dividend yield of 1.5%. Including share buybacks, the total shareholder yield is 7.5%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: What is Garrett Motion Inc.'s revenue and earnings growth?
Garrett Motion Inc. (GTX) grew revenue by 3.1% year-over-year. Earnings per share increased by 19.7% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is Garrett Motion Inc. buying back stock?
Garrett Motion Inc. (GTX) repurchased $208.0 million of stock over the trailing twelve months. This represents a buyback yield of 6.0%.
Q: How does Garrett Motion Inc. compare to competitors in Industrials?
Compared to other companies in Industrials, Garrett Motion Inc. (GTX) shows: ROIC of 55.8% is above the sector median of 8.0% (Top 0%). FCF margin of 9.5% exceeds the sector median of 5.4% (Top 31% of sector). Gross margin at 20.4% is 13 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.
Q: What warning signs should I watch for with Garrett Motion Inc.?
Garrett Motion Inc. (GTX) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-10-23. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.