GTX

We rate Garrett Motion Inc. (GTX) as a Hold with a composite score of 63.0/100 at a current price of $20.26. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (87th percentile) and momentum (75th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (28th percentile) and quality (57th percentile) tempers our overall conviction. We assign a Narrow Moat rating (58/100), Low uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Garrett Motion Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 63.0/100 places it at rank #418 in our full 7,333-stock universe. At $2.7B in market capitalization, Garrett Motion Inc. is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 1% and favorable momentum (75th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 20% (-22.3pp vs sector) narrow to operating margins of 10% (+9.1pp vs sector) and net margins of 7.9%, yielding a gross-to-net conversion rate of 39%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $20.26, Garrett Motion Inc. appears undervalued relative to its fundamentals. Our value factor score of 87/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 13.2x (a 41% discount to the sector median of 22.3x), EV/EBITDA of 10.1x (near the sector median), P/S of 1.0x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to Garrett Motion Inc.. The company exhibits strong financial stability with a beta of 0.96, and a stability factor in the 71th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 71th percentile with quality at the 57th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: above-average stability (71th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Garrett Motion Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-45.4%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Garrett Motion Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Garrett Motion Inc. receives a Hold rating with a composite score of 63.0/100 (rank #418 of 7,333). Our quantitative framework assigns a Narrow Moat (58/100, trend: stable), Low uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 64/100.

Our analysis supports a neutral stance on Garrett Motion Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.