It has been about a month since the last earnings report for Garrett Motion (GTX Quick QuoteGTX - Free Report) . Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Garrett Motion due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Garrett Motion Inc. before we dive into how investors and analysts have reacted as of late.

Garrett Q2 Earnings Beat Estimates

Garrett Motion reported second-quarter 2026 earnings of 53 cents per share, beating the Zacks Consensus Estimate of 46 cents by 15.2%. Earnings increased 26.2% from 42 cents in the year-ago quarter.

Net sales rose 6.9% year over year to $976 million and surpassed the consensus estimate of $964 million by 1.2%. Growth across all product verticals, productivity gains and a favorable business mix supported the performance. Adjusted EBIT margin expanded 200 basis points to 15.6%.

Growth Across All Verticals

Net sales increased 7% on a reported basis and 5% at constant currency. The improvement reflected share-of-demand gains in passenger vehicles, stronger commercial vehicle and industrial demand, and higher aftermarket volumes.

Gasoline sales advanced 5% year over year, including 3% growth at constant currency. New application launches and program ramp-ups in Europe, India and South America supported the category.

Diesel sales increased 8%, or 6% at constant currency, driven by light commercial vehicle and pickup truck demand across Europe, Asia and South America, along with program ramp-ups in India.

Commercial vehicle and industrial sales climbed 10% year over year on both reported and constant-currency bases. Strong on-highway demand in China following program launches and higher North American genset activity for data centers contributed to the increase. Industrial turbo sales exceeded $80 million during the first half. The business is now expected to generate about $200 million in full-year sales, supported by power-generation demand.

Aftermarket sales rose 8%, or 7% excluding currency effects, as volumes improved in Europe, China and Australia.

Profitability Expands Despite Inflation

Gross profit increased to $212 million from $181 million. Gross margin improved to 21.7% from 19.8%. Higher sales volumes, productivity, pricing net of inflation pass-through, lower research, development and engineering costs, and favorable product mix more than offset commodity, transportation and energy inflation.

Adjusted EBIT rose $28 million year over year to a record $152 million. Higher volumes contributed $16 million, productivity added $10 million and pricing net of inflation pass-through provided $8 million. These benefits were partly offset by $8 million of inflation-related costs and a $5 million unfavorable currency impact.

Cash Flow and Liquidity

Net income totaled $101 million, up from $87 million a year earlier, while net income margin increased to 10.3% from 9.5%. The improvement was mainly driven by higher gross profit and lower interest expense, partially offset by increased taxes, lower non-operating income and higher selling, general and administrative expenses.

Net cash provided by operating activities was $145 million, compared with $158 million in the prior-year period. Adjusted free cash flow edged up to $122 million from $121 million, representing 80% conversion from adjusted EBIT. Garrett ended the quarter with $788 million of liquidity, including $158 million in unrestricted cash and $630 million of available revolver capacity.

Capital Returns and Leverage

The company repurchased $28 million of common stock during the quarter, bringing year-to-date buybacks to $115 million. Garrett also paid $15 million in dividends, while its board declared a third-quarter dividend of 8 cents per share.

GTX voluntarily repaid $50 million of term-loan debt during the quarter. Total debt principal declined to $1.39 billion from $1.44 billion at the end of 2025. The company had $135 million remaining under its share-repurchase authorization at quarter-end.

Garrett Advances Its Technology Pipeline

The company secured multiple turbocharger awards, including a large North American light vehicle program and several commercial vehicle applications in China and India. It also won a major Garrett MEG award for data-center gensets and additional power-generation programs across multiple regions.

Garrett began pre-development work on a commercial vehicle electric powertrain with a Japanese truck manufacturer. The company also secured a production award for industrial air compression using its centrifugal compressor technology and reported growing interest from heating, ventilation and air-conditioning manufacturers in its electric cooling solutions.

Full-Year 2026 Outlook Raised

Garrett now expects 2026 net sales of $3.7-$3.9 billion, compared with the previous range of $3.6-$3.9 billion. Constant-currency sales growth is projected between 1% and 7%, up from the earlier forecast of a 2% decline to 6% growth.

Adjusted EBIT is anticipated between $560 million and $600 million versus the prior range of $520-$600 million. Adjusted free cash flow is forecast in the band of $385-$475 million compared with $355-$475 million previously. The revised outlook reflects first-half execution, a stronger product mix and continued productivity benefits, despite softer expected light vehicle production.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Garrett Motion has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Garrett Motion has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Garrett Motion is part of the Zacks Automotive - Original Equipment industry. Over the past month, QuantumScape Corporation (QS Quick QuoteQS - Free Report) , a stock from the same industry, has gained 12.8%. The company reported its results for the quarter ended June 2026 more than a month ago.

QuantumScape reported revenues of $0 million in the last reported quarter, representing a year-over-year change of 0%. EPS of -$0.16 for the same period compares with -$0.20 a year ago.

QuantumScape is expected to post a loss of $0.18 per share for the current quarter, representing no change from the year-ago quarter. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for QuantumScape. Also, the stock has a VGM Score of D.