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Is GTX Stock a Buy Now as Garrett Expands Beyond Turbos?
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Key Takeaways
GTX expands beyond turbochargers, while building industrial cooling and genset businesses.
GTX guides 2026 sales of $3.6B-$3.8B and adjusted EBIT of $520M-$570M
GTX projects $355M-$455M 2026 FCF and plans to return about 75% to shareholders via dividends and buybacks.
Garrett Motion (GTX - Free Report) has rebuilt momentum as a turbocharger leader with growing optionality in electrified compression and industrial adjacencies. With management guiding to sales growth and incremental margin improvement in 2026, the setup comes down to execution, cash generation, and what investors are already paying for that path.
Factors Favoring GTX
Garrett continues to strengthen its leadership in the global turbocharger market, supported by a strong technology portfolio and a consistent track record of winning new program awards. GTX has maintained a turbocharger win rate above 50% in recent years, and continued design wins across gasoline variable-geometry turbos and hybrid and range-extended platforms are positioned to support growth through launches and ramp-ups.
Garrett is advancing a portfolio of zero-emission technologies. Management targets approximately $1 billion in revenue from zero-emission technologies by 2030, supported by multiple growth drivers across mobility and industrial applications.
Progress in adjacencies is another lever. The company is diversifying into industrial cooling and power-generation markets. Recent wins include an award in China for an oil-free centrifugal compressor for electric bus and truck HVAC systems, with production expected to begin in 2027, and a Weichai Power program that marks the first commercial deployment of GTX’s largest MEG turbocharger platform in marine and power generation applications. The company’s strategic collaboration with Trane Technologies to integrate next-generation oil-free compressors into commercial HVAC systems further supports the scaling of its industrial cooling platform.
Management expects industrial cooling to scale to more than 5% of revenue by the end of the decade, while industrial gensets—already exceeding $100 million in sales—are projected to grow very significantly in 2026 on new business wins and retrofit demand.
GTX 2026 Guidance and the Path to Higher EBIT Margin
For 2026, management guided to net sales of $3.6-$3.8 billion, GAAP net income of $295–$335 million, adjusted EBIT of $520-$570 million, and adjusted EBITDA of $647-$697 million.
The midpoint of adjusted EBIT implies an adjusted EBIT margin of about 14.7%, roughly 50 basis points higher than 2025 levels. The improvement is expected to be driven mainly by volume and continued productivity initiatives. Offsetting that, management flagged pricing headwinds, inflation, and mix as partial drags on the margin path.
Garrett’s Free Cash Flow and 75% Return Commitment
GTX’s capital return story rests on sustained free cash flow. Management projected 2026 adjusted free cash flow of $355-$455 million, broadly in line with the $403 million delivered in 2025.
Management remains committed to return around 75% of adjusted free cash flow to shareholders through dividends and share repurchases. GTX repurchased $72 million of shares in the fourth quarter and also raised quarterly dividend. For the full year, the company bought back $208 million shares and authorized a new $250 million repurchase program for 2026.
Risks That Could Limit GTX’s Upside
Key risks cluster around demand, pricing, and execution. Management expects global light-vehicle production to decline roughly 1-3% in 2026, a softer volume backdrop that can weigh on turbocharger demand even if GTX continues to win programs.
Margins could also come under pressure if unfavorable pricing, inflation, or mix shifts outweigh productivity gains. Aftermarket weakness is another concern because that business typically carries attractive margins and cash conversion, yet management did not embed a meaningful recovery in the 2026 outlook.
Finally, newer growth platforms carry timing and execution risk. Industrial cooling deployments are expected to begin with limited programs in 2026, with broader production ramping in 2027 and beyond, leaving near-term results more dependent on the core business.
Valuation Check & Estimates
Garrett trades at 9.98x forward 12-month EPS, below the broader industry average and marginally lower than BorgWarner Inc. (BWA - Free Report) at 10.04x, while Magna International Inc. (MGA - Free Report) trades lower at 8.27x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Garrett’s 2026 and 2027 EPS implies year-over-year growth of 16% each. See how the EPS estimates have been revised in the past 60 days.
Image Source: Zacks Investment Research
Wrapping Up
Garrett’s core turbocharger franchise remains strong, backed by steady program wins, improving margins and healthy free cash flow that supports shareholder returns. The company is also building optionality through electrified compression and industrial adjacencies, though these businesses will take time to scale meaningfully. In the near term, results remain tied to the core turbo business and a softer global light-vehicle production outlook could limit upside. As such, we maintain a neutral stance on the stock rather than turning bullish at current levels.
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Image: Bigstock
Is GTX Stock a Buy Now as Garrett Expands Beyond Turbos?
Key Takeaways
Garrett Motion (GTX - Free Report) has rebuilt momentum as a turbocharger leader with growing optionality in electrified compression and industrial adjacencies. With management guiding to sales growth and incremental margin improvement in 2026, the setup comes down to execution, cash generation, and what investors are already paying for that path.
Factors Favoring GTX
Garrett continues to strengthen its leadership in the global turbocharger market, supported by a strong technology portfolio and a consistent track record of winning new program awards. GTX has maintained a turbocharger win rate above 50% in recent years, and continued design wins across gasoline variable-geometry turbos and hybrid and range-extended platforms are positioned to support growth through launches and ramp-ups.
Garrett is advancing a portfolio of zero-emission technologies. Management targets approximately $1 billion in revenue from zero-emission technologies by 2030, supported by multiple growth drivers across mobility and industrial applications.
Progress in adjacencies is another lever. The company is diversifying into industrial cooling and power-generation markets. Recent wins include an award in China for an oil-free centrifugal compressor for electric bus and truck HVAC systems, with production expected to begin in 2027, and a Weichai Power program that marks the first commercial deployment of GTX’s largest MEG turbocharger platform in marine and power generation applications. The company’s strategic collaboration with Trane Technologies to integrate next-generation oil-free compressors into commercial HVAC systems further supports the scaling of its industrial cooling platform.
Management expects industrial cooling to scale to more than 5% of revenue by the end of the decade, while industrial gensets—already exceeding $100 million in sales—are projected to grow very significantly in 2026 on new business wins and retrofit demand.
GTX 2026 Guidance and the Path to Higher EBIT Margin
For 2026, management guided to net sales of $3.6-$3.8 billion, GAAP net income of $295–$335 million, adjusted EBIT of $520-$570 million, and adjusted EBITDA of $647-$697 million.
The midpoint of adjusted EBIT implies an adjusted EBIT margin of about 14.7%, roughly 50 basis points higher than 2025 levels. The improvement is expected to be driven mainly by volume and continued productivity initiatives. Offsetting that, management flagged pricing headwinds, inflation, and mix as partial drags on the margin path.
Garrett’s Free Cash Flow and 75% Return Commitment
GTX’s capital return story rests on sustained free cash flow. Management projected 2026 adjusted free cash flow of $355-$455 million, broadly in line with the $403 million delivered in 2025.
Management remains committed to return around 75% of adjusted free cash flow to shareholders through dividends and share repurchases. GTX repurchased $72 million of shares in the fourth quarter and also raised quarterly dividend. For the full year, the company bought back $208 million shares and authorized a new $250 million repurchase program for 2026.
Risks That Could Limit GTX’s Upside
Key risks cluster around demand, pricing, and execution. Management expects global light-vehicle production to decline roughly 1-3% in 2026, a softer volume backdrop that can weigh on turbocharger demand even if GTX continues to win programs.
Margins could also come under pressure if unfavorable pricing, inflation, or mix shifts outweigh productivity gains. Aftermarket weakness is another concern because that business typically carries attractive margins and cash conversion, yet management did not embed a meaningful recovery in the 2026 outlook.
Finally, newer growth platforms carry timing and execution risk. Industrial cooling deployments are expected to begin with limited programs in 2026, with broader production ramping in 2027 and beyond, leaving near-term results more dependent on the core business.
Valuation Check & Estimates
Garrett trades at 9.98x forward 12-month EPS, below the broader industry average and marginally lower than BorgWarner Inc. (BWA - Free Report) at 10.04x, while Magna International Inc. (MGA - Free Report) trades lower at 8.27x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Garrett’s 2026 and 2027 EPS implies year-over-year growth of 16% each. See how the EPS estimates have been revised in the past 60 days.
Image Source: Zacks Investment Research
Wrapping Up
Garrett’s core turbocharger franchise remains strong, backed by steady program wins, improving margins and healthy free cash flow that supports shareholder returns. The company is also building optionality through electrified compression and industrial adjacencies, though these businesses will take time to scale meaningfully. In the near term, results remain tied to the core turbo business and a softer global light-vehicle production outlook could limit upside. As such, we maintain a neutral stance on the stock rather than turning bullish at current levels.
Garrett Motion currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.