Highlights

  • Garrett shows 27.44% one-year basic EPS growth, a P/E of 11.87 and PEG of 0.84.
  • Second quarter net sales were $976 million against $913 million; net income was $101 million.
  • Garrett repurchased $115 million of common stock in six months; $135 million remains authorized.
  • The board declared a $0.08 per share dividend on July 29, 2026.

One-year earnings growth of 27.44%, paired with a trailing twelve-month P/E of 11.87 and an expected-basis PEG of 0.84, puts Garrett Motion (NASDAQ:GTX) among undervalued growth stocks, with shares trading at USD 22.23 on October 28, 2026, up 0.98%. In its latest disclosures, the turbocharging and electric motor technology company reduced the applicable rate under its Credit Agreement on May 18, repurchased $28 million of common stock in the second quarter, and reported second quarter 2026 net income of $101 million on July 29.

Garrett Motion is incorporated in Delaware, with principal executive offices in Plymouth, Michigan, and Rolle, Switzerland. The company designs, manufactures and sells turbocharging, air and fluid compression, and high-speed electric motor technologies to original equipment manufacturers and independent aftermarket distributors in the mobility and industrial fields. Garrett reports one operating segment and discloses net sales by product line: diesel, gas, commercial vehicles and industrial, and aftermarket.

Growth: Second Quarter Net Sales, Gross Profit and Earnings Per Share

Net sales were $976 million in the second quarter against $913 million a year earlier, and $1,961 million for the six months against $1,791 million. The company said the quarterly increase of 7% reflected higher demand across all verticals and price net of inflation pass-through, partially offset by lower customer recoveries on import tariffs. Gasoline product sales rose 5% on new application launches and program ramp-ups in Europe, India and South America. Diesel sales rose 8%, commercial vehicle and industrial sales rose 10% with demand for generators serving data centers, and aftermarket sales rose 8%.

Gross profit was $212 million against $181 million, and the gross profit percentage was 21.7% against 19.8%. Net income was $101 million against $87 million, and $196 million for the six months against $149 million. Basic earnings per share were $0.54 against $0.43, and diluted earnings per share were $0.53 against $0.42. Adjusted EBIT, a non-GAAP measure, was $152 million against $124 million.

Valuation: P/E of 11.87, PEG of 0.84 and Cash Generation

The P/E ratio of 11.87 is measured on trailing twelve-month earnings, and the PEG ratio of 0.84 on expected growth. Net income margin was 10.3% against 9.5%. Cash provided by operating activities was $243 million for the six months against $214 million. Total deficit was $675 million at June 30, 2026 against $802 million at December 31, 2025. The company said it outperformed the light vehicle industry in the second quarter.

Capital and Balance Sheet: Repurchases, Dividends and Debt

Garrett repurchased $28 million of common stock in the second quarter and $115 million in the six months, including 2,500,000 shares bought for $50 million from funds affiliated with Oaktree Capital Management, a related party. The board authorized a $250 million program valid from January 1 to December 31, 2026, and $135 million remained at June 30, 2026.

The board declared a cash dividend of $0.08 per share on April 30 and another $0.08 per share on July 29, payable September 15. Dividends paid were $31 million in the six months.

Cash and cash equivalents were $158 million against $177 million at December 31, 2025. Term loan principal was $583 million against $637 million, senior notes principal was $800 million, and the revolving facility had $630 million of available capacity. The Second Amendment on May 18 reduced the applicable rate to Adjusted Term SOFR plus 1.75%, and the company made an early repayment of $50 million on its 2025 Dollar Term Facility. Garrett said cash flows, term loan borrowings, the 2032 Senior Notes and the revolving facility should provide adequate liquidity for at least the next 12 months.

Disclosed Risks and Outlook: Tariffs, Brazil Tax Matter and Currency

The effective tax rate was 19.8% against 14.7%. U.S. net sales were $174 million against $178 million, and the company noted softer demand for off-highway replacement parts in North America. It recorded $8 million of commodity, transportation and energy inflation and said currency impacts lowered Adjusted EBIT by $5 million. Garrett said it continues to monitor macroeconomic and geopolitical conditions.

Garrett disclosed a September 2020 infraction notice from Brazilian tax authorities challenging tax credits used between January 2017 and February 2020, with an estimated loss contingency of $29 million including penalties and interest. The company said liability is not currently probable and recorded no accrual.

Garrett expects to keep investing in facilities for new product launches and zero-emission technologies, and expects to contribute approximately $5 million to non-U.S. pension plans in 2026, of which $2 million had been contributed at June 30, 2026.