Core Insights - The Zacks Rank system emphasizes earnings estimates and revisions to identify winning stocks, with a focus on value investing as a preferred strategy in various market conditions [1][2] Company Analysis - GARRETT MOTION (GTX) is currently rated as a Zacks Rank 1 (Strong Buy) with a Value grade of A, trading at a P/E ratio of 9.45 compared to the industry average of 22.02 [3] - Over the past year, GTX's Forward P/E has fluctuated between a high of 9.56 and a low of 5.83, with a median of 7.57 [3] - The P/S ratio for GTX is 0.78, slightly below the industry average of 0.8, indicating potential undervaluation [4] - LCI Industries (LCII) holds a Zacks Rank of 2 (Buy) and a Value grade of A, with a P/B ratio of 1.78 compared to the industry's 3.71 [5] - The P/B ratio for LCII has ranged from a high of 2.27 to a low of 1.39, with a median of 1.86 over the past year [5] - Both GTX and LCII are considered likely undervalued stocks, supported by their strong earnings outlooks [6]

Core Insights - Garrett Motion Inc. (NASDAQ:GTX) is recognized for its low P/E ratios among NASDAQ stocks, with Stifel initiating coverage with a Buy rating and a price target of $17.50 [1] - The company aims to achieve $1 billion in revenue from its Zero Emission portfolio by 2030, indicating significant growth potential in this sector [1] - Despite a shrinking addressable market, Garrett's legacy turbocharging division is expected to gain market share and generate substantial free cash flow to support expansion plans [2] Company Overview - Garrett Motion Inc. specializes in developing, producing, and distributing turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers [3]

Company Overview - Garrett Motion is part of the Auto-Tires-Trucks group, which consists of 96 companies and is currently ranked 9 in the Zacks Sector Rank [2] - The company has a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions [3] Performance Metrics - Year-to-date, Garrett Motion has returned 44.2%, significantly outperforming the Auto-Tires-Trucks sector average return of 5.4% [4] - The consensus estimate for Garrett Motion's full-year earnings has increased by 11.9% over the past quarter, reflecting improved analyst sentiment [3] Industry Context - Garrett Motion operates within the Automotive - Original Equipment industry, which includes 50 stocks and is currently ranked 70 in the Zacks Industry Rank [5] - The Automotive - Original Equipment industry has seen an average gain of 12.6% year-to-date, indicating that Garrett Motion is performing better than its industry peers [5] Comparison with Peers - Blue Bird, another stock in the Auto-Tires-Trucks sector, has returned 49.9% year-to-date and has a Zacks Rank of 1 (Strong Buy) [4][5] - The Automotive - Domestic industry, which includes Blue Bird, is ranked 153 and has only moved +3.8% since the beginning of the year, highlighting the relative strength of Garrett Motion [6]

Company Overview - Garrett Motion Inc. is a leading differentiated automotive technology provider with a 70-year history of innovation in the automotive sector and beyond, including off-highway equipment, marine, and power generators [4] - The company specializes in turbocharging technology, which has led to significant reductions in engine size, fuel consumption, and CO2 emissions [4] - Garrett is actively developing technology solutions for Zero Emission Vehicles, including fuel cell compressors for hydrogen fuel cell vehicles and electric propulsion systems for battery electric vehicles [4] - The company operates six R&D centers, 13 manufacturing sites, and employs over 9,000 people across more than 20 countries [4] Board Changes - Kevin Mahony has resigned from the Board of Directors of Garrett Motion Inc., where he also served on the Nominating and Governance Committee and the Finance Committee [1][2] - Mahony's resignation follows Centerbridge Partners' divestiture of a significant portion of its ownership stake in Garrett, which now holds less than 5% of the company's common stock [2] - The Chairman of the Board, Daniel Ninivaggi, expressed gratitude for Mahony's contributions and acknowledged his role in Garrett's success [3]

Core Viewpoint - Garrett Motion Inc. successfully repriced its existing $690 million term loan, reducing interest rates and enhancing its financial position, which reflects lender confidence in the company's long-term strategy [1][2]. Company Overview - Garrett Motion Inc. is a differentiated technology leader with a 70-year history in the automotive sector, focusing on innovation in turbocharging and reducing engine size, fuel consumption, and CO2 emissions [3]. - The company is expanding its technology solutions for Zero Emission Vehicles, including fuel cell compressors for hydrogen fuel cell vehicles and systems for battery electric vehicles [3]. - Garrett operates six R&D centers, 13 manufacturing sites, and employs over 9,000 people across more than 20 countries [3].

Core Viewpoint - Garrett Motion (GTX) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][2]. Earnings Estimates - Analysts' optimism regarding Garrett Motion's earnings prospects is leading to higher estimates, which is expected to positively impact the stock price [2]. - The Zacks Rank system indicates a strong correlation between earnings estimate revisions and stock price movements, with Zacks 1 Ranked stocks averaging a +25% annual return since 2008 [3]. Current Quarter and Year Estimates - For the current quarter, Garrett Motion is projected to earn $0.37 per share, reflecting a +54.2% increase from the previous year [5]. - The Zacks Consensus Estimate for the current quarter has risen by 5.71% over the last 30 days, with no negative revisions [5]. - For the full year, the expected earnings are $1.41 per share, representing an +11.9% change from the prior year [6]. - The consensus estimate for the current year has increased by 7.63% during the same timeframe [7]. Zacks Rank and Performance - The positive revisions in earnings estimates have led Garrett Motion to achieve a Zacks Rank 1 (Strong Buy), indicating strong potential for outperformance [8]. - Research shows that stocks with Zacks Rank 1 and 2 significantly outperform the S&P 500 [8]. Recent Stock Performance - Garrett Motion shares have increased by 24.6% over the past four weeks, indicating investor confidence in the company's earnings growth prospects [9].

Group 1 - Battery Electric Vehicles (BEVs) are disrupting Garrett Motion's (NASDAQ: GTX) legacy product portfolio of turbochargers, but this disruption is not indicative of a decline in the company's prospects [1] - The transition from Internal Combustion Engine (ICE) vehicles to BEVs presents both challenges and opportunities for Garrett Motion [1] Group 2 - The article emphasizes the importance of understanding the evolving automotive landscape and its impact on traditional automotive suppliers like Garrett Motion [1]

Core Viewpoint - The company, Garrett Motion, reported a mixed second quarter but achieved a significant earnings beat, leading to a positive stock reaction from investors [1]. Financial Performance - Net sales increased by almost 3% year over year to $913 million, while GAAP net income rose by nearly 36% to $87 million [2]. - On a non-GAAP basis, the per-share earnings grew by 48% to $0.43, surpassing the consensus analyst estimate of $0.42 [4]. Strategic Developments - The CEO highlighted the company's leadership in turbocharging, securing over $1 billion in light vehicle program extensions, and advancing zero-emission technologies [5]. - Garrett raised its guidance for 2025, projecting net sales between $3.4 billion and $3.6 billion, and GAAP net income between $233 million and $278 million [5].

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $913 million, flat at constant currency, with gasoline turbo sales growing by 4%, outperforming the industry [6][13] - Adjusted EBIT was $124 million with a margin of 13.6%, reflecting a 20 basis point decline due to unfavorable sales mix and tariff dilution [7][15] - Adjusted free cash flow was $121 million, representing a conversion rate of 62% for the first half of 2025 [7][18] Business Line Data and Key Metrics Changes - Gasoline turbo sales showed strong growth, while diesel and aftermarket applications experienced softness, particularly in North America [14][28] - The company recovered $14 million in tariffs during the quarter, contributing positively to financial performance [14][15] Market Data and Key Metrics Changes - The company secured over $1 billion in light vehicle program extensions, enhancing future revenue visibility [8][24] - Interest in turbochargers for range-extended electric vehicles is growing, with new wins in China and Europe [9][10] Company Strategy and Development Direction - The company aims to leverage its capabilities to develop differentiated high-speed and highly efficient technologies, focusing on robust returns for shareholders [22][24] - A new R&D center in Wuhan, China, has been integrated to strengthen the company's presence in a fast-moving region [12] Management Comments on Operating Environment and Future Outlook - Management raised the 2025 outlook due to a stronger euro-dollar exchange rate, maintaining prior industry views despite tariff impacts [19][20] - The company remains alert to adapt to slowing demand if necessary, while continuing to allocate capital to deliver shareholder value [7][19] Other Important Information - The company repurchased $22 million of common stock and paid a $12 million quarterly dividend in Q2 2025 [8][18] - The Board of Directors declared a third-quarter dividend payable on September 16, 2025 [8][19] Q&A Session Summary Question: Unfavorable sales mix and business adjustments - Management explained that the unfavorable sales mix is due to strong growth in gasoline sales, which have lower margins, and softness in aftermarket applications in North America [27][28] Question: Cash position and stock buyback strategy - Management indicated that stock buybacks are not linear and emphasized their commitment to returning 75% or more of cash to shareholders over time [30][44] Question: Drivers of stronger operating performance in the second half - Management highlighted cost control and potential volume stabilization as key drivers for improved performance, while remaining conservative in guidance [33][34] Question: Tariff recovery expectations - Management confirmed expectations to fully recover tariff costs this year, having already achieved significant recovery [35][36] Question: Growth potential of large turbos for backup power - Management sees substantial growth potential in the large turbo market, estimating it could reach hundreds of millions in revenue within the next three to five years [40][42] Question: Non-linear stock repurchase strategy - Management reiterated that stock repurchase is not linear and emphasized their commitment to the capital allocation framework [44][45]

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $913 million, flat at constant currency, indicating outperformance in light vehicle turbo sales for both gasoline and diesel applications [6][14] - Adjusted EBIT was $124 million with an adjusted EBIT margin of 13.6%, reflecting a 20 basis point decline due to unfavorable sales mix and tariff impacts [7][16] - Adjusted free cash flow for the quarter was $121 million, resulting in a conversion rate of 62% for the first half of 2025 [7][18] Business Line Data and Key Metrics Changes - Gasoline turbo sales grew by 4% in the quarter, outperforming the industry, while diesel sales experienced softness due to lower production in Europe and reduced aftermarket demand in North America [6][15] - The company recovered $14 million in tariffs during the quarter, contributing positively to financial performance [15] Market Data and Key Metrics Changes - The company secured over $1 billion in light vehicle program extensions, enhancing future revenue visibility [10] - There is growing interest in turbocharger development for range-extended electric vehicles, with new wins in China and Europe [10][12] Company Strategy and Development Direction - The company aims to leverage its capabilities to develop differentiated high-speed and efficient technologies, focusing on robust returns for shareholders [23][25] - A new R&D center has been integrated in Wuhan, China, to strengthen the company's presence in a rapidly evolving market [13] Management Comments on Operating Environment and Future Outlook - Management raised the 2025 outlook to reflect a stronger euro-dollar exchange rate, maintaining prior industry views while accounting for tariff impacts [20][21] - The company anticipates continued gasoline strength and incremental operating performance to offset unfavorable product mix, with expectations of full tariff recovery [21][37] Other Important Information - The company repurchased $22 million of common stock and paid a $12 million quarterly dividend, with a commitment to return at least 75% of adjusted free cash flow to shareholders [8][19] - The company has reduced total outstanding shares by 39% since Q1 2023 through its share repurchase program [19][24] Q&A Session Summary Question: Could you discuss the unfavorable sales mix and adjustments being made? - The unfavorable sales mix is driven by strong growth in gasoline sales, which have lower margins, and softness in aftermarket and off-highway segments primarily in North America [29][30] Question: Why didn't the company buy back more stock despite having more cash? - The buyback strategy is not linear, and the company remains committed to returning 75% or more of cash to shareholders over time [32][32] Question: What are the drivers of stronger operating performance in the second half? - Continued cost control and potential stabilization of volumes are expected to drive performance, with a conservative outlook due to tariff impacts [35][36] Question: Will the company fully recover tariff costs this year? - The company expects to fully recover tariff costs, having achieved this since the beginning [37][38] Question: How substantial could the large turbo business for backup power become? - The large turbo business is expected to grow significantly, potentially reaching hundreds of millions of dollars in revenue within the next three to five years [44] Question: Why was stock repurchase not more aggressive this quarter? - The stock repurchase strategy is non-linear, and the company has dry powder for potential block trades, while remaining committed to its capital allocation framework [47]