Garrett Motion's Q1 2025: Reviing Up The Value Engine
With a 15%+ FCF yield and growth across ICE, hybrid, and EV segments, GTX remains significantly undervalued despite recent price jump
Disclaimer: I own shares of Garrett Motion and stand to benefit if they rise in price. I may decide to purchase or sell shares at any time without prior notice. Do your own research and size positions appropriately if you invest. Nothing here is meant to be understood as investment or financial advice.
TL;DR
Garrett Motion's Q1 2025 results show continued operational strength with adjusted EBIT reaching $131M (14.9% margin) despite a slight sales decline. The company is winning business across conventional turbo, hybrid, and EV applications, including its first major electric motor production award. With management projecting $345M in adjusted FCF for 2025 (15.6% yield to market cap) and committing to return 75% to shareholders through dividends and buybacks, GTX offers a compelling investment case. Conservative valuation models suggest the stock could be worth multiples of its current price. Recent refinancing has improved the debt profile with no significant near-term maturities, positioning the company well for continued success despite misconceptions about its future in an electrifying automotive landscape.
Introduction
Yesterday, GTX 0.00%↑ announced its first quarter 2025 results. For context, my last post on Garrett Motion was on their FY 2024 results back in March:
For your information, I would like to point you to an interesting post on Reddit by substack user
(thank you for reaching out and sharing) claiming to have interviewed a former employee https://www.reddit.com/r/ScuttlebuttInvesting/comments/1jvcfae/garrett_motion_gtx/Of course, I cannot validate or verify the content, but it appears to be consistent with my impression of the company’s performance so far.I base this article on the company’s materials:
…And the earnings call
Outline
Tl;DR
Introduction
Q1 2025
Equity Summary
Conclusion
Disclaimer