• Investors may be wondering whether Garrett Motion's recent share price rise still leaves value on the table, or if the easy money has already been made.
• The stock last closed at US$32.81, with returns of 3.9% over 7 days, 13.1% over 30 days, 88.8% year to date and 222.7% over the past year.
• Recent coverage has focused on Garrett Motion as investors reassess established auto components stocks and their role in longer term portfolios. This context helps explain why price moves have picked up and why many are now scrutinising whether the current level reflects a fair valuation.
• On Simply Wall St's 6 point valuation framework, Garrett Motion currently scores 3 out of 6. Next up is a closer look at how different valuation methods stack up for this stock, and how a broader lens on valuation at the end of the article might change the picture.

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

A Discounted Cash Flow, or DCF, model takes projected future cash flows from a company and discounts them back to today, aiming to estimate what those cash flows are worth in present value terms.

For Garrett Motion, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow stands at about $365.08 million. Looking ahead, analyst estimates and Simply Wall St extrapolations point to free cash flow of around $421.58 million in 2026, $445.38 million in 2027 and $496.13 million in 2028. By 2035, the extended projection used in the model reaches $720.61 million, all in US dollars.

Bringing these projected cash flows back to today and adding the terminal value produces an estimated intrinsic value of about $53.20 per share. Against the recent share price of $32.81, this implies the stock is about 38.3% undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Garrett Motion is undervalued by 38.3%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

Approach 2: Garrett Motion Price vs Earnings

For a profitable company, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. Higher growth expectations and lower perceived risk tend to justify a higher P/E, while slower growth or higher risk usually call for a lower, more conservative multiple.

Garrett Motion currently trades on a P/E of 17.91x. That sits below the Auto Components industry average P/E of 19.64x, but above the peer average of 11.87x, which may suggest investors are assigning it a higher valuation than some direct comparables. To move beyond simple comparisons, Simply Wall St uses a “Fair Ratio” metric, which estimates what P/E might be reasonable given factors such as the company’s earnings growth profile, industry, profit margin, market cap and key risks.

This Fair Ratio for Garrett Motion is 17.27x. Because it folds in more company specific drivers, it can be more informative than just lining the stock up against peers or the wider industry. Set against the current P/E of 17.91x, the Fair Ratio points to the stock trading somewhat above that modelled level, which suggests it screens as overvalued on this measure.

Result: OVERVALUED

Wall Street's queuing for one rocket. While SpaceX counts down to its IPO, other companies tied to the new space race are already in orbit. → 20 Compelling Space Companies watchlist · Global Space Race Investing Ideas screener · Scan the sector by valuation on Rocket Lab's valuation page.

Upgrade Your Decision Making: Choose your Garrett Motion Narrative

Earlier it was mentioned that there is an even better way to think about valuation, so this is where Narratives come in, giving you a simple story that links your view of Garrett Motion’s business to explicit forecasts and a Fair Value that you can compare with the current price.

On Simply Wall St’s Community page, Narratives let you set assumptions for future revenue, earnings and margins, then connect those forecasts to a Fair Value. This allows you to see in one place how your story about the company translates into numbers and what that might mean for potential upside or downside.

Because Narratives update automatically when new information such as earnings or news is added to the platform, you are not locked into a static model. You can quickly see how fresh data changes your Fair Value versus the latest share price.

For Garrett Motion, for example, one investor might build a Narrative closer to the higher Fair Value case, around US$42, based on confidence in data center turbochargers and zero emission technologies. Another might prefer the lower Fair Value narrative, around US$24, if more cautious about internal combustion exposure and execution risk. Each can use that comparison between Fair Value and the current price to inform their own buy, hold or sell decision.

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

Fair Value: US$35.67

Implied undervaluation vs last close: about 8.0% below this fair value

Revenue growth assumption: 4.0%

• Analyst consensus case built around hybrid, electric and industrial turbo programs, with over US$1b of long term light vehicle wins and growing exposure to data center backup power and other industrial uses.
• Assumes margins edge higher as zero emission technologies and non automotive end markets scale, while share buybacks reduce the share count by 7.0% a year over the next three years.
• Arrives at a US$35.67 fair value using earnings forecasts out to 2029, a future P/E of 15.8x and an 8.7% discount rate, with analysts highlighting both the opportunities and the execution and industry risks.

Fair Value: US$24.00

Implied overvaluation vs last close: about 36.7% above this fair value

Revenue growth assumption: 3.3%

• More cautious analyst cohort that expects slower scaling of zero emission and E Powertrain programs, plus pressure on compressor demand if large HVAC and battery customers limit spending.
• Highlights the risk that greater electrification reduces turbo content per vehicle and that heavier exposure to China and industrial cycles could weigh on volumes and margins over time.
• Anchors on a US$24.00 fair value, using lower revenue growth, a future P/E of 9.9x and an 8.6% discount rate, and assumes the current share price already bakes in richer expectations.

If you want to move beyond the previews and see how your own assumptions stack up against these, you can compare them directly with the full set of community narratives for Garrett Motion and stress test which story best matches your view of the stock.

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.