Investment Thesis
While Garrett Motion demonstrates operational resilience with positive operating and free cash flows ($98M and $69M) and improving EPS momentum (+20.6% YoY), the company's balance sheet is critically impaired with negative stockholders' equity of -$781M and weak liquidity ratios (0.98x current, 0.76x quick), indicating severe financial distress that overshadows near-term operational improvements.
Strengths
- Positive operating and free cash flows demonstrate operational efficiency despite balance sheet stress
- Revenue growth of 3.1% YoY and EPS growth of 20.6% YoY show improving earnings momentum
- Reasonable profit margins (gross 19.9%, operating 12.0%, net 9.6%) and adequate interest coverage of 3.8x
Risks
- Critical balance sheet insolvency with negative stockholders' equity of -$781M indicating accumulated losses or restructuring
- Weak liquidity position (current ratio 0.98x, quick ratio 0.76x) creates near-term solvency and operational risk
- High debt burden of $1.4B with minimal cash cushion of $142M increases refinancing and default risk
Key Metrics to Watch
- Stockholders' equity trajectory and timeline to positive book value recovery
- Liquidity ratios and operating cash flow sustainability to meet debt obligations
- Debt refinancing activity, covenant compliance, and maturity schedule for long-term debt
Financial Metrics
Revenue
985.0M
Net Income
95.0M
EPS (Diluted)
$0.49
Free Cash Flow
69.0M
Total Assets
2.4B
Cash
142.0M
Profitability Ratios
Gross Margin
19.9%
Operating Margin
12.0%
Net Margin
9.6%
ROE
N/A
ROA
4.0%
FCF Margin
7.0%
Balance Sheet & Liquidity
Current Ratio
0.98x
Quick Ratio
0.76x
Debt/Equity
N/A
Debt/Assets
132.9%
Interest Coverage
3.81x
Long-term Debt
1.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T17:45:36.790081 |
Data as of: 2026-03-31 |
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