• Investors may be wondering if Garrett Motion at around US$29.57 is still offering value after a strong run, or if they might be late to the story.
• The stock has delivered returns of 13.1% over the past week, 51.8% over the past month, 70.1% year to date and 152.2% over the past year, putting it firmly on many investors' radars.
• Recent coverage has focused on Garrett Motion's role in the Auto Components sector and how investors are reassessing companies involved in vehicle technology and powertrain solutions. This context helps explain why the stock's performance over the last 3 and 5 years, at 269.0% and 371.8% respectively, is attracting renewed attention from both existing and new shareholders.
• Simply Wall St currently assigns Garrett Motion a valuation score of 4 out of 6. The rest of this article will walk through how different valuation methods assess the stock and will also point you toward an even richer way to think about value at the end.

Approach 1: Garrett Motion Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s value. It is essentially asking what those future dollars are worth to you right now.

For Garrett Motion, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The company’s last twelve months Free Cash Flow is about $365.1 million. Analysts provide $418.6 million to $486.9 million of Free Cash Flow forecasts up to 2028, and Simply Wall St then extends this path with its own projections out to 2035, reaching an estimated $703.5 million in that year.

Bringing all of those projected cash flows back to today and adding a terminal value results in an estimated intrinsic value of $52.49 per share. Compared with a recent share price around $29.57, the model implies the stock is 43.7% undervalued based on these assumptions and inputs.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Garrett Motion is undervalued by 43.7%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: Garrett Motion Price vs Earnings

For a profitable company, the P/E ratio is a straightforward way to check what you are paying for each dollar of earnings. Investors usually expect higher P/E ratios when a company has stronger growth prospects or lower perceived risk, and lower P/E ratios when growth is more modest or risks are higher.

Garrett Motion currently trades on a P/E of 16.14x. That is close to the Auto Components industry average P/E of 19.68x and the peer group average of 15.76x, so on simple comparisons the stock sits in a fairly similar range to its sector and direct peers.

Simply Wall St also calculates a Fair Ratio of 19.30x for Garrett Motion. This is a proprietary estimate of what the P/E could be given factors such as the company’s earnings growth profile, industry, profit margins, market cap and specific risks. Because it adjusts for these company level traits, the Fair Ratio can provide a more tailored yardstick than broad industry or peer averages alone.

Comparing the current P/E of 16.14x with the Fair Ratio of 19.30x suggests the stock is trading below that Fair Ratio.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Garrett Motion Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are worth introducing as a simple way for you to attach a clear story about Garrett Motion to a set of numbers such as your assumed fair value and your expectations for future revenue, earnings and margins, then connect that story directly to a financial forecast and a fair value estimate.

On Simply Wall St’s Community page, Narratives are available as an easy tool used by millions of investors. You can see different viewpoints side by side and compare each Narrative’s Fair Value with the current share price to help you decide whether the stock looks attractive, fully priced or stretched on that specific view.

Narratives also update automatically when new information such as earnings releases or news is added to the platform. The numbers linked to each story move with the latest data rather than staying fixed.

For Garrett Motion, one investor might align with a more optimistic Narrative that points to a Fair Value around US$31.37 based on revenue of about US$4.1b, earnings of about US$395.6m and a P/E of 15.3x by 2029. Another might prefer a more cautious Narrative closer to a Fair Value of about US$22.17 that uses earnings of about US$396.5m but a lower P/E of 11.3x. Your own view can sit anywhere along that spectrum.

For Garrett Motion, however, we will make it really easy for you with previews of two leading Garrett Motion Narratives:

Fair Value: US$31.37 per share

Implied discount to this Fair Value based on the recent price around US$29.57: about 5.7%.

Revenue growth assumption: 4.0% per year

• Expects share gains in turbochargers and broader exposure to commercial vehicle, off highway and industrial power generation to support net sales and adjusted EBIT margins over time.
• Assumes early traction in high speed E Powertrain and oil free compressors for HVAC, data centers and battery energy storage can add new revenue streams with attractive contribution margins.
• Builds on analysts in the more optimistic camp who see earnings around US$395.6m by 2029, a P/E of 15.3x on those earnings and ongoing share count reduction, all discounted back at about 8.6%.

Fair Value: US$22.17 per share

Implied premium to this Fair Value based on the recent price around US$29.57: about 33.4%.

Revenue growth assumption: 3.5% per year

• Highlights that Garrett Motion still leans heavily on gasoline and diesel turbocharger demand, while electrification trends could reduce the long term addressable market for internal combustion engine components.
• Flags that zero emission and industrial products are growing from a smaller base, and that mix shifts, tariffs, currency and customer concentration could pressure margins and earnings stability.
• Uses a consensus Fair Value around US$22.17 per share, anchored on revenue of about US$4.0b, earnings of about US$396.5m by 2029, an 11.3x P/E multiple and an 8.8% discount rate.

If you want to see how other investors connect their assumptions on growth, margins and risk to a specific Fair Value, you can review the full range of community views in one place, then decide which narrative lines up best with your own expectations for Garrett Motion.To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Garrett Motion on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Garrett Motion? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.