This in-depth report, last updated on October 24, 2025, provides a multi-faceted examination of Garrett Motion Inc. (GTX), covering its Business & Moat, Financial Statements, Past Performance, Future Growth, and Fair Value. Our analysis benchmarks GTX against industry peers BorgWarner Inc. (BWA), Visteon Corporation (VC), and Valeo SA (FR.PA). Key takeaways are framed within the investment philosophies of Warren Buffett and Charlie Munger to provide actionable insights.
Mixed: Garrett Motion presents a complex picture for investors. The company is a highly profitable leader in turbochargers for traditional engines, generating strong cash flow. However, this core market is shrinking due to the global shift toward electric vehicles (EVs). Furthermore, a major red flag is its balance sheet, where total liabilities exceed total assets. While the company is developing new technologies, its EV efforts currently lag far behind its competitors. Despite these risks, the stock appears undervalued based on its strong cash generation and high returns on capital. This makes it a high-risk value play suitable only for investors comfortable with significant long-term uncertainty.
US: NASDAQ
Garrett Motion Inc. operates as a key supplier in the global automotive industry, specializing in differentiated technology for vehicle powertrains. The company's business model is centered on designing, manufacturing, and selling advanced turbochargers, electric-boosting (E-Boosting) solutions, and automotive software. Its core operations revolve around partnerships with nearly all major global Original Equipment Manufacturers (OEMs), providing them with critical components that help improve vehicle performance and fuel efficiency while reducing emissions. The company's main products can be segmented into gasoline turbochargers, diesel turbochargers, aftermarket parts and services, and a nascent but growing portfolio of zero-emissions technologies, including electric compressors for hydrogen fuel cells. Garrett Motion's key markets are geographically diverse, with significant sales in Europe, the United States, and Asia, reflecting the global footprint of its automaker customers.
Garrett's most significant product line is its gasoline turbochargers, which contribute approximately 53% of its product revenue. These components are highly engineered devices that force more air into an engine's combustion chamber, allowing for the use of smaller, more efficient engines without sacrificing power—a trend known as "engine downsizing." The global market for automotive turbochargers is estimated to be around $12 billion, but it faces a low to potentially negative compound annual growth rate (CAGR) due to the rise of battery electric vehicles (BEVs) that do not use these components. The market is an oligopoly, with Garrett's primary competitors being BorgWarner and IHI Corporation. Compared to its rivals, Garrett Motion is often recognized for its technological innovation, particularly in variable nozzle technology (VNT) which optimizes performance across different engine speeds. Its primary customers are the world's largest automakers, such as Ford and Volkswagen, who award multi-year contracts for specific vehicle platforms. The stickiness of these contracts is extremely high; once a turbocharger is designed into a vehicle platform, it is almost never switched for the life of that model (typically 5-7 years) due to prohibitive re-engineering and validation costs. This creates a powerful moat for Garrett, built on high customer switching costs and its deep technological expertise.
The second major product line is diesel turbochargers, accounting for about 29% of product revenue. These are essential for commercial vehicles like heavy-duty trucks, buses, and off-highway equipment, as well as some passenger cars, particularly in Europe. The market for diesel turbos, especially in the commercial vehicle segment, is expected to be more resilient than the passenger gasoline market, as electrification of heavy-duty transport will take much longer. Profit margins are solid, and the competitive landscape is similar, with BorgWarner (through its acquisition of Holset) and Cummins being major players. Garrett differentiates itself with products known for extreme durability and reliability, which are critical requirements for commercial operators where vehicle downtime is costly. Customers include major truck manufacturers like Daimler Truck and Volvo. The purchasing decisions are based on total cost of ownership, fuel efficiency gains, and compliance with stringent emissions regulations. The moat in this segment is reinforced by Garrett's long-standing reputation for quality and its ability to meet the rigorous demands of commercial applications, creating a strong brand preference and high barriers to entry for new competitors.
Garrett's aftermarket business, which makes up around 16% of revenue, involves selling replacement turbochargers and performance upgrade kits through a global distribution network. This segment serves the existing fleet of turbocharged vehicles already on the road. The market is more fragmented than the OEM business, with competition from OEM-branded parts, independent remanufacturers, and low-cost alternatives. However, the aftermarket generally offers higher profit margins. Customers range from independent repair shops to performance tuning specialists and individual enthusiasts. The stickiness here is driven by brand loyalty and the technical complexity of the product; mechanics and enthusiasts often prefer a genuine Garrett part due to its reputation for quality and performance, avoiding the risks associated with inferior copies. The moat for the aftermarket business is primarily its powerful brand name, which is synonymous with turbocharging, and its extensive distribution network that makes its products widely available. This provides a stable and profitable revenue stream that is less cyclical than new vehicle sales.
Finally, the company's smallest but most critical segment for the future is its new technologies portfolio, including electrification and zero-emission vehicle solutions, which currently contribute only around 2% of revenue. This includes E-Boosting products for hybrid vehicles, electric compressors (E-Compressors) for hydrogen fuel cell vehicles, and advanced vehicle software for powertrain controls and health monitoring. The addressable markets for these products are growing rapidly as the industry transitions away from fossil fuels. However, this area is intensely competitive, with large, well-funded auto suppliers like Bosch, Continental, and Vitesco, as well as numerous startups, all vying for position. Customers are the same OEMs, but they are sourcing for their next-generation EV and hydrogen platforms. The stickiness has not yet been established, as suppliers are in a race to win the first generation of major platform awards. Garrett's competitive position here is based on leveraging its deep expertise in high-speed rotating machinery and powertrain dynamics and applying it to new electric applications. However, its moat in this area is unproven and speculative. The company is essentially trying to build a new competitive advantage from the ground up to replace the one that is slowly eroding with the decline of the internal combustion engine.
In conclusion, Garrett Motion's business model is that of a highly specialized, technology-driven market leader. It has a formidable moat protecting its legacy turbocharger business, characterized by high switching costs, deep engineering expertise, and economies of scale. This structure provides a significant degree of resilience and cash flow generation in the medium term. The primary vulnerability is the business's overwhelming dependence on the internal combustion engine (ICE). The durability of its competitive edge is questionable over the long term and is entirely contingent on a successful pivot to electrification.
The company's strategy is to use the cash flows from its declining-but-profitable ICE business to fund the research and development necessary to build a new moat in zero-emission technologies. This is a classic 'melting ice cube' scenario, where the company must reinvent itself before its core market disappears. While it has promising technology and has secured some initial design wins for its new products, the scale of this new business is still very small. Therefore, the overall resilience of Garrett's business model is mixed. It is strong today but faces a clear and existential threat that requires flawless execution on a very difficult technological and commercial transition.
Garrett Motion's current financial snapshot reveals a company that is operationally strong but carries a risky balance sheet. The company is solidly profitable, posting a net income of $77 million in its most recent quarter (Q3 2025) on $902 million in revenue. More importantly, these profits are translating into real cash. Operating cash flow was a healthy $100 million in the same period, comfortably exceeding net income. However, the balance sheet presents a major concern for investors. The company holds a significant amount of debt, totaling $1.54 billion, while its shareholders' equity is negative at -$813 million. This negative equity position is a red flag, indicating that total liabilities exceed total assets, a sign of historical financial distress or aggressive capital management.
The income statement highlights Garrett Motion's robust profitability. For the full fiscal year 2024, the company generated $3.48 billion in revenue with an operating margin of 13.76%. This performance has been maintained in recent quarters, with Q2 2025 revenue at $913 million and an operating margin of 13.47%, followed by Q3 2025 revenue of $902 million and an improved operating margin of 14.41%. The stability and strength of these margins, particularly in the competitive auto components industry, suggest that Garrett Motion has effective cost controls and a degree of pricing power with its customers. For investors, this consistent profitability is a key strength, demonstrating the core business is healthy and can generate earnings reliably.
Critically, Garrett Motion's reported earnings appear to be high quality, as they are backed by strong cash generation. A key test is comparing net income to cash from operations (CFO), and here the company excels. In Q3 2025, CFO of $100 million was significantly higher than the net income of $77 million. Similarly, in Q2 2025, CFO was $158 million against a net income of $87 million. This positive gap indicates efficient management of working capital and that accounting profits are not just on paper. The company is also generating substantial free cash flow (FCF), which is the cash left over after paying for operating expenses and capital expenditures. FCF was strong at $90 million in Q3 and $143 million in Q2, underscoring the business's ability to produce surplus cash.
Despite strong cash flows, the balance sheet is a source of considerable risk. The company's liquidity is tight, with a current ratio (current assets divided by current liabilities) of 1.01 as of the latest quarter. A ratio this close to 1 suggests a very thin cushion to cover short-term obligations. The primary concern is leverage. Total debt stands at $1.54 billion against only $230 million in cash, resulting in a net debt of over $1.3 billion. Most alarmingly, the company has a negative shareholders' equity of -$813 million. This situation, where liabilities are greater than the book value of assets, typically arises from accumulated losses or significant recapitalizations in the past. While the company's earnings (EBIT of $130 million in Q3) easily cover its interest expense ($29 million), the lack of an equity buffer makes the company financially fragile and vulnerable to economic downturns. The balance sheet is therefore classified as risky.
The company's cash flow engine is currently running strong, primarily driven by its profitable operations. Cash from operations has been robust, at $100 million in Q3 and $158 million in Q2. Capital expenditures (capex) appear modest and focused on maintenance rather than aggressive expansion, totaling just $10 million and $15 million in the last two quarters, respectively. This low capex requirement allows the company to convert a large portion of its operating cash flow into free cash flow. This free cash is then being used aggressively for shareholder returns, including debt paydown, dividend payments ($11 million in Q3), and significant share buybacks ($84 million in Q3). While this cash generation looks dependable for now, its sustainability is tied to the cyclical automotive market.
Garrett Motion is actively returning capital to shareholders through both dividends and buybacks. The company pays a quarterly dividend, which amounted to $11 million in Q3 2025. This payout is easily affordable, representing just a small fraction of the $90 million in free cash flow generated during the quarter. The company has also been buying back its own shares at a fast pace, spending $84 million in Q3 and $25 million in Q2 on repurchases. These buybacks have reduced the number of shares outstanding, which helps boost earnings per share (EPS). While these shareholder returns are well-covered by current cash flows, deploying so much cash on buybacks and dividends is an aggressive strategy for a company with a negative equity balance sheet. A more conservative approach would prioritize using that cash to pay down debt and rebuild its equity base.
In summary, Garrett Motion's financial foundation has clear strengths and weaknesses. The key strengths include its impressive and stable profitability, evidenced by operating margins around 14%, and its powerful cash conversion, with free cash flow consistently exceeding $90 million per quarter recently. However, these are offset by significant red flags on the balance sheet. The most serious risks are the negative shareholders' equity of -$813 million and the high total debt load of $1.54 billion. Overall, the foundation looks unstable. While the engine of the business (its operations) is running exceptionally well, the chassis (the balance sheet) is highly leveraged and lacks the equity cushion needed to absorb significant economic shocks.
Garrett Motion's historical performance over the last five years is heavily distorted by its Chapter 11 bankruptcy filing in late 2020 and emergence in 2021. This event fundamentally reset the company's capital structure and makes a straight five-year comparison challenging. However, looking at the data reveals a clear turning point. The period from 2020-2021 was marked by volatility, negative free cash flow, and major balance sheet restructuring. In contrast, the post-emergence period from 2022 to 2024 showcases a more stable and profitable enterprise from an operational standpoint.
Comparing the five-year trend to the most recent three years highlights this shift. Over the full five-year period, revenue performance was erratic, with a compound annual growth rate of approximately 2.8%. Free cash flow for the five years was weak on average due to large negative figures in 2020 and 2021. However, focusing on the last three fiscal years (FY2022-FY2024), the picture changes. Operating margins stabilized at a healthy average of 13.7%, and the company generated an impressive average of $328 million in free cash flow per year. This demonstrates a significant improvement in operational execution and cash generation capabilities post-restructuring, even though revenue in the latest fiscal year (FY2024) declined by 10.6%.
From an income statement perspective, the most impressive historical feature has been the stability of profitability in recent years. After a weaker year in 2020 with an operating margin of 9.36%, Garrett Motion sustained margins in a tight range: 13.87% in 2021, 13.99% in 2022, 13.28% in 2023, and 13.76% in 2024. This resilience, especially in a cyclical industry prone to cost pressures, points to strong cost management and a solid competitive position. In contrast, revenue has been far more volatile, swinging from 19.7% growth in 2021 to a 10.6% decline in 2024. Earnings per share (EPS) are not a reliable indicator of historical performance due to massive changes in the share count and one-off adjustments related to the restructuring, such as the -$51 million net income to common in 2023 despite positive overall net income.
The balance sheet's history sends a clear signal of high risk, although the situation has improved. The company has operated with negative shareholders' equity for the entire five-year period, standing at -$673 million at the end of FY2024. This means that historically, its liabilities have exceeded its assets, a significant red flag for conservative investors. On a positive note, total debt was reduced from a high of $2.14 billion in 2020 to $1.53 billion in 2024. The company's debt-to-EBITDA ratio of 2.61 in FY2024 is manageable, but the overall leverage, combined with negative equity, indicates a financial structure with less flexibility than its peers.
Cash flow performance provides the clearest evidence of the company's operational turnaround. After posting negative free cash flow (FCF) in 2020 (-$55 million) and 2021 (-$382 million) during its restructuring, Garrett Motion became a consistent cash generator. It produced strong positive FCF of $284 million in 2022, $382 million in 2023, and $317 million in 2024. This reliability in recent years is a major strength, showing that the company's earnings are converting effectively into cash, which is essential for funding operations, paying down debt, and returning capital to shareholders.
Regarding capital actions, the company's history is complex. No common dividends were paid between 2020 and 2022, though preferred dividends were issued. A common stock dividend was initiated recently. The most significant action has been on the share count. Following its restructuring, shares outstanding exploded from 65 million in 2022 to 222 million by the end of 2024, representing massive dilution for early shareholders. Paradoxically, during this period of rising share count, the company began aggressively buying back stock, spending $213 million in 2023 and $304 million in 2024 on repurchases.
From a shareholder's perspective, these actions have had mixed results. The enormous dilution severely damaged per-share value creation; for instance, FCF per share fell from $4.36 in 2022 to $1.41 in 2024, even as total FCF remained strong. The dilution was a direct result of the bankruptcy reorganization, which was necessary for the company's survival but came at a high cost to equity holders. The recent, aggressive buybacks appear to be an attempt to reverse some of this damage. These repurchases are funded almost entirely by free cash flow, which makes the capital return policy aggressive. In FY2024, buybacks consumed 96% of FCF, leaving little for debt reduction or reinvestment.
In conclusion, Garrett Motion's historical record does not inspire confidence in its consistency but does show evidence of a successful operational turnaround. The performance has been choppy, defined by a period of distress followed by three years of operational stability and strong cash generation. The single biggest historical strength is the company's ability to maintain high and stable operating margins. Its greatest weakness is the legacy of its bankruptcy: a damaged balance sheet and, most importantly, the massive shareholder dilution that has severely hampered the translation of business success into per-share value.
The core auto components sub-industry is in the midst of a historic technological shift, moving from internal combustion engines (ICE) to battery electric vehicles (BEVs) and other zero-emission technologies like hydrogen fuel cells. Over the next 3-5 years, this transition will accelerate dramatically, driven by stringent global emissions regulations (e.g., Euro 7, US EPA standards), government incentives for EV purchases, and rapidly improving BEV performance and cost-effectiveness. The global EV penetration rate is expected to climb from around 18% in 2023 to potentially 35-40% of new vehicle sales by 2028. This seismic shift bifurcates the market: demand for traditional ICE components like turbochargers will enter a structural decline, while the market for EV-specific systems like thermal management, e-axles, and power electronics is projected to grow at a CAGR exceeding 20%.
The key catalyst for demand will be the launch of dozens of new, mass-market EV platforms by major automakers. This creates a massive, once-in-a-generation opportunity for suppliers to win new business. However, this also intensifies competition. The barrier to entry in EV components is different; while manufacturing scale remains crucial, expertise in software, power electronics, and thermal dynamics becomes paramount. Legacy suppliers are racing to re-tool their expertise, while new, tech-focused companies are also entering the fray. For a company like Garrett Motion, whose core expertise is in ICE technology, the challenge is not just to innovate but to convince customers that its new ZEV products are superior to those from more established players in the electronics and software space.
Garrett's primary product, gasoline turbochargers, which account for over half of its revenue, faces the most direct threat. Current consumption is tied to new ICE and hybrid vehicle production. The main factor limiting consumption today is simply the accelerating adoption of BEVs, which do not use turbochargers. Over the next 3-5 years, consumption of gasoline turbochargers is set to decrease steadily. While some growth may persist in hybrid applications, which still use smaller ICE engines, this will not be enough to offset the volume lost from pure BEVs. The global market for light-vehicle turbochargers is expected to decline at a CAGR of -2% to -4% through 2030. Customers like Ford and Volkswagen will continue to source turbos for their remaining ICE platforms, but the number of such platforms will shrink. Competition with BorgWarner and IHI for these final, high-volume contracts will be fierce, likely pressuring prices. The primary risk for Garrett is an even faster-than-expected consumer shift to EVs, which would crater demand for its main product. A 10% faster decline in ICE sales than forecast would directly impact over half of Garrett's revenue base, a high-probability risk.
Diesel turbochargers, particularly for commercial vehicles, offer a more resilient outlook. Current consumption is driven by global freight demand and off-highway machinery production. This segment is less susceptible to immediate electrification due to the high energy density requirements for heavy-duty applications. Over the next 3-5 years, consumption is expected to be relatively stable or decline only slightly. The global commercial vehicle market is forecast to grow modestly, around 2-3% annually, providing a stable base. The primary path to growth here is through technology that meets even stricter emissions standards. Garrett's expertise in VNT can help it outperform competitors like Cummins and BorgWarner (Holset) by offering superior fuel efficiency and emissions control. The number of suppliers in the heavy-duty diesel space is small due to the extreme reliability requirements. The biggest long-term risk is the eventual viability of hydrogen fuel cells or battery-electric heavy-duty trucks. If a major fleet operator like Daimler Truck or Volvo accelerates its ZEV truck rollout, it would signal a faster decline for this segment. This is a medium-probability risk within a 5-year timeframe.
The aftermarket segment is Garrett's most stable pillar for the near future. It currently serves the global fleet of hundreds of millions of turbocharged vehicles already on the road. Consumption is driven by the age of the vehicle parc; as cars get older, components like turbochargers eventually fail and need replacement. This creates a steady, non-cyclical revenue stream. For the next 3-5 years, consumption is expected to remain stable or grow slightly, as the large number of turbocharged cars sold in the last decade enters its prime replacement window. This segment generates higher gross margins than the OEM business. However, Garrett faces competition from independent remanufacturers and low-cost Asian suppliers. The company's brand reputation for quality is its primary defense. The main risk is margin erosion due to this price competition. A second, medium-probability risk is a faster-than-expected scrapping of older ICE vehicles in favor of new EVs, which would shrink the addressable repair market sooner than anticipated.
All of Garrett's future growth potential rests on its new technologies portfolio, which is currently negligible in size (around 2% of revenue). This includes E-Compressors for hydrogen fuel cell vehicles and E-Boosting products for advanced hybrids. Consumption today is limited to early-stage programs and prototypes. The key constraint is the nascent state of the hydrogen vehicle market. Over the next 3-5 years, this is the only segment with the potential for exponential growth. The addressable market for fuel cell components could reach several billion dollars by 2030. The catalyst will be government investment in hydrogen infrastructure and the launch of fuel cell vehicles by OEMs like Hyundai, Toyota, and several heavy-duty truck makers. Garrett must win platform awards in this space to survive long-term. However, it faces formidable competition from larger suppliers like Bosch, Mahle, and Continental, who have deeper pockets and broader expertise in power electronics. The risk of failing to win significant market share is high. If Garrett cannot secure at least a 10-15% share of the E-Compressor market in the next 5 years, its growth story will effectively be over.
Ultimately, Garrett Motion's growth narrative is one of survival and transformation rather than straightforward expansion. The company's strategic imperative is to manage the controlled decline of its legacy business, maximizing cash flow from the stable aftermarket and the remaining ICE platforms. This cash must then be funneled into its ZEV technology bets. This is an incredibly difficult balancing act. Investing too little in ZEVs guarantees obsolescence, while investing too much too quickly could strain finances before the new markets have scaled. The company's success hinges entirely on its ability to leverage its engineering expertise in rotating machinery to become a leader in a completely new technological domain, a feat that few industrial companies manage successfully.
As of late 2025, Garrett Motion (GTX) presents a compelling valuation case with a market capitalization of approximately $3.44 billion and a stock price of $17.71. The company's valuation is anchored by its powerful ability to generate cash, reflected in a low Price to Free Cash Flow (P/FCF) ratio of 9.11 and an impressive free cash flow (FCF) yield of around 11%. Other key metrics like a trailing P/E ratio of 11.08 and an EV/EBITDA of 7.80 suggest the market is pricing the company conservatively, despite strong recent stock performance. This strong cash flow profile provides a solid foundation for its valuation, even as the company navigates the long-term secular shift away from internal combustion engines (ICE).
Multiple valuation approaches suggest the stock is trading below its intrinsic worth. Analyst consensus points to a median price target of around $20.00, implying double-digit upside. A conservative discounted cash flow (DCF) model, which assumes a long-term decline in cash flows due to the EV transition, still indicates a fair value range of $20 to $25 per share. Furthermore, when compared to its auto component peers, Garrett Motion appears significantly undervalued. It trades at a discount on an EV/EBITDA basis despite boasting superior operating margins of around 14%, a characteristic that would typically command a premium valuation. The market seems to be overly penalizing GTX for the future risks while ignoring its present-day profitability.
The case for undervaluation is strongly reinforced by yield and quality metrics. The company's 11% FCF yield is exceptionally high, providing a substantial cash return to investors and a significant margin of safety. Management is actively capitalizing on this by returning cash to shareholders, evidenced by a massive -10.30% reduction in share count over the last year, leading to a double-digit shareholder yield. Perhaps most telling is the company's elite operational quality; its Return on Invested Capital (ROIC) of over 40% dwarfs its estimated cost of capital (5.5%-7.0%). This enormous spread is the hallmark of a high-quality business creating significant value, a fact that its low valuation multiples fail to reflect.
Triangulating these different signals provides a consistent picture. Valuation ranges from analyst targets ($18.80–$20.80), DCF models ($20–$25), and yield-based analysis ($19–$24) all point upward from the current price. Consolidating these views leads to a final fair value estimate of $19.00 to $24.00, with a midpoint of $21.50. This suggests a potential upside of over 20% from the current price, leading to a clear 'Undervalued' verdict. The primary risk to this thesis is a faster-than-expected decline in its core ICE business, but at the current price, investors appear well-compensated for taking on that risk.
Warren Buffett would view Garrett Motion in 2025 as a statistically cheap but fundamentally challenging investment. He would be drawn to the company's dominant market position in turbochargers, its impressive operating margins of around 13%, and a high Return on Invested Capital (ROIC) exceeding 20%, figures that indicate a very efficient and profitable business. However, Buffett's core principle of investing in businesses with predictable long-term futures would be a major stumbling block, as Garrett's primary market of internal combustion engines is in secular decline. This reliance on a shrinking market introduces a level of technological and forecasting uncertainty that he typically avoids. While the low valuation, with a P/E ratio around 7x, offers a margin of safety, the risk of the business becoming a 'value trap' is too high for his liking. Therefore, Buffett would likely avoid investing, preferring companies with clearer and more durable long-term prospects. If forced to choose from the sector, Buffett would likely favor the scale and clearer EV transition strategy of BorgWarner (BWA) or the predictable secular growth of Visteon (VC), as they represent more understandable and durable enterprises. A significant drop in price to 'cigar butt' levels, or concrete proof that its new EV and hydrogen ventures are becoming large, profitable moats in their own right, would be required for him to reconsider.
Charlie Munger would view Garrett Motion as a classic case of a high-quality business facing a perilous technological disruption. He would admire the company's dominant position in turbochargers, which translates into superb operating margins around 13% and a return on invested capital exceeding 20%—hallmarks of a great business. However, Munger would be deeply skeptical of the fact that this profitable core business serves a shrinking market: the internal combustion engine. The entire investment thesis hinges on a successful, and currently unproven, pivot to electric and hydrogen technologies, a type of speculative, high-stakes transformation that he typically avoids, placing it in his 'too hard' pile. While the stock's low forward P/E of ~7x seems attractive, Munger would likely see it as a potential value trap reflecting profound uncertainty, not a bargain. For retail investors, the takeaway is that while GTX is financially excellent today, its long-term survival depends on a difficult technological leap, making it a high-risk bet. If forced to pick the best companies in this sector, Munger would likely favor Visteon for its powertrain-agnostic growth in digital cockpits, BorgWarner for its more advanced and diversified EV transition, and GTX itself only as a deep value play on a successful but uncertain turnaround. A clear sign of significant, profitable contract wins for its EV or hydrogen products at scale would be required to change Munger's cautious stance.
Bill Ackman would likely view Garrett Motion in 2025 as a classic activist value investment: a high-quality, simple, predictable, and cash-generative business that is deeply misunderstood and undervalued by the market. The investment thesis would center on the market's overemphasis on the decline of internal combustion engines (ICE), which has created an opportunity to buy a market leader with dominant pricing power and industry-leading operating margins of ~13% at a very low multiple of ~7x forward earnings. Ackman would be attracted to the company's strong free cash flow and its post-bankruptcy balance sheet, which now features a manageable net debt to EBITDA ratio of ~1.5x, providing the financial flexibility to fund a transition into EV and hydrogen technologies. The key risk is execution—specifically, whether management can deploy its cash flows into new technologies at high rates of return before the legacy business erodes. For retail investors, Ackman would see this as a compelling opportunity where the downside is cushioned by the profitable legacy business, while the upside is a multi-year transformation story. If forced to choose the best stocks in this sector, Ackman might favor Garrett Motion for its deep value and turnaround potential, BorgWarner (BWA) for its scale and proven EV transition strategy, and Visteon (VC) for its pure-play exposure to the secular growth in cockpit digitalization, with each representing a different archetype of quality and value. Ackman's decision to invest could change if the company fails to demonstrate clear, tangible progress and attractive projected returns on its investments in new, non-ICE technologies within the next 12-18 months.
Garrett Motion (GTX) holds a unique position in the automotive supplier landscape, defined by its legacy, its recent financial history, and its strategic pivot. As the former performance technologies division of Honeywell, GTX inherited a powerful brand and a near-monopolistic position in the turbocharger market. Turbochargers are critical for improving the efficiency and power of internal combustion engines, and GTX's technology is deeply embedded in the platforms of major global automakers. This legacy business is a cash cow, providing the financial resources needed to navigate the industry's shift away from fossil fuels. However, this strength is also a double-edged sword, as the company's fate is inextricably linked to the ICE market, which faces a long-term, secular decline with the rise of electric vehicles (EVs).
The company's strategic response to this disruption is a dual-path approach. On one hand, it continues to innovate in its core turbo business, developing solutions for high-efficiency gasoline engines and hybrid vehicles, which are expected to serve as a bridge technology for years to come. On the other hand, GTX is aggressively investing in zero-emission technologies. Its focus areas include electric compressors for hydrogen fuel cells, electric motors and inverters for battery electric vehicles (BEVs), and advanced software for vehicle diagnostics and performance management. This strategy is logical, but it requires flawless execution and careful capital allocation to ensure the profitable legacy business can successfully fund the nascent, high-growth ventures.
GTX's competitive standing is also shaped by its emergence from Chapter 11 bankruptcy in 2021. The restructuring process allowed the company to shed significant debt and asbestos-related liabilities inherited from Honeywell, resulting in a much cleaner and more resilient balance sheet compared to many of its peers. This financial flexibility is a crucial advantage in a capital-intensive industry. It allows GTX to invest in R&D and withstand economic downturns more effectively. However, the company still operates in a highly competitive and cyclical environment, where success is dictated by winning long-term OEM contracts and managing volatile supply chains.
Ultimately, Garrett Motion is a story of transformation. It is a technology leader in a profitable but declining niche, attempting to leverage its engineering prowess to build a new growth engine in electrification. Compared to larger, more diversified competitors like BorgWarner or Continental, GTX is smaller and more focused. This could allow it to be more agile, but it also means it has less room for error. Its success hinges on its ability to out-innovate larger rivals in specific zero-emission technologies while skillfully managing the gradual decline of its core turbocharger business. For investors, this presents a classic risk-reward scenario centered on the company's ability to execute a complex and challenging technological pivot.
BorgWarner is a larger, more diversified, and more financially robust competitor to Garrett Motion. While both are leaders in powertrain technology and are navigating the shift to electrification, BorgWarner's significant head start in acquiring EV-focused companies and its broader product portfolio give it a distinct advantage. GTX competes with focused engineering depth in turbos and a leaner post-restructuring balance sheet, but BorgWarner's scale and strategic execution in the EV space position it as the stronger overall entity.
In Business & Moat, both have strong Tier-1 supplier brands, but BorgWarner's is broader across powertrain components. Switching costs are high for both, as components are designed into multi-year OEM platforms (~5-7 year lifecycles), making it costly for automakers to switch suppliers mid-cycle. BorgWarner has a significant scale advantage with ~$14.2B in annual revenue compared to GTX's ~$3.9B, allowing for greater purchasing power and R&D spend. While not a primary driver, global manufacturing footprints (BWA: 93 locations, GTX: 35 locations) create operational networks. Both navigate stringent emissions and safety regulations, a barrier to new entrants, and possess deep patent portfolios. Winner: BorgWarner Inc. due to its superior scale, broader customer integration, and larger global footprint.
For Financial Statement Analysis, BorgWarner's acquisitions have driven higher top-line growth (BWA TTM growth ~13% vs. GTX ~8%). However, GTX consistently posts stronger operating margins (~13%) due to its niche dominance, while BorgWarner's are typically in the ~9% range, diluted by integration costs. GTX's Return on Invested Capital (ROIC) has been strong post-bankruptcy (~20%+), outperforming BorgWarner's (~9%), reflecting efficient capital use. GTX also has a lower Net Debt/EBITDA ratio (~1.5x) compared to BorgWarner (~1.9x). Both are solid free cash flow generators, but BorgWarner's absolute FCF is much larger. Winner: Garrett Motion Inc. on a quality-of-financials basis due to superior margins, higher returns on capital, and a cleaner balance sheet.
Looking at Past Performance, over the last three years (2021-2023), BorgWarner has shown stronger revenue CAGR due to its EV-related acquisitions, while GTX's growth has been more modest. GTX has maintained more stable and higher operating margins (average ~13%) compared to BorgWarner (average ~9%). BWA's total shareholder return (TSR) has been volatile, with a 3-year TSR of ~-15%, while GTX has performed strongly since re-listing. GTX carries higher perceived risk due to its ICE concentration, reflected in higher stock volatility. Winner: BorgWarner Inc. for demonstrating a more proactive growth strategy and delivering more consistent, if unspectacular, returns over a longer period.
In terms of Future Growth, BorgWarner has a clearer path to capturing the larger EV Total Addressable Market (TAM) with its Charging Forward 2027 strategy. The company has a multi-billion dollar backlog of secured EV business in components like inverters and battery packs. GTX's growth is more tied to the slower-developing hydrogen fuel cell market and winning content on hybrid platforms. BorgWarner has a decisive edge in EV market capture. Winner: BorgWarner Inc. due to its more advanced and better-funded transition to electrification, with a much larger backlog of secured EV business.
Regarding Fair Value, GTX typically trades at a lower forward P/E ratio (~7x) compared to BorgWarner (~9x), reflecting its higher ICE risk. Similarly, its EV/EBITDA multiple is lower (~5.5x vs. BWA's ~6.5x). BorgWarner pays a consistent dividend (yield ~2.0%), which GTX does not. GTX is quantitatively cheaper, but this discount reflects its slower growth profile and technology transition risk. BorgWarner's modest premium is for its more certain EV strategy. Winner: Garrett Motion Inc. offers better value today based on current earnings multiples, making it attractive for investors willing to underwrite the execution risk.
Winner: BorgWarner Inc. over Garrett Motion Inc. While Garrett Motion boasts superior profitability margins (~13% vs BWA's ~9%), a stronger balance sheet (Net Debt/EBITDA ~1.5x), and a more attractive valuation (Forward P/E ~7x), BorgWarner is the strategically better-positioned company for the long term. BorgWarner's decisive and well-funded pivot to electrification provides a clearer path to sustainable growth in a rapidly changing industry. GTX's heavy reliance on the declining ICE market, despite its strong cash flow generation, creates significant long-term risk that its promising but smaller-scale EV ventures may not overcome in time. Therefore, BorgWarner's proven ability to execute a large-scale strategic pivot makes it the superior investment for long-term, risk-adjusted returns.
Visteon Corporation is a specialized Tier-1 supplier focused exclusively on cockpit electronics, including digital instrument clusters, infotainment systems, and displays. This contrasts sharply with Garrett Motion's mechanical and hardware focus on powertrain components. While both serve the same OEM customers, they operate in different technological domains of the vehicle. Visteon is a pure-play bet on the digitalization of the vehicle interior, while GTX is a bet on powertrain efficiency and the transition from ICE to zero-emission propulsion.
For Business & Moat, Visteon's brand is strong within its electronics niche, while GTX's is dominant in turbos. Switching costs are high for both, as Visteon's software and hardware are deeply integrated into a vehicle's electrical architecture, just as GTX's turbos are integrated into the engine. In terms of scale, Visteon's annual revenue is similar to GTX's at ~$4.0B. Both companies face regulatory pressures, with Visteon navigating cybersecurity and functional safety standards and GTX emissions regulations. Visteon's moat comes from its software expertise and focused R&D, a different kind of barrier than GTX's manufacturing and mechanical engineering prowess. Winner: Even, as both companies have strong, defensible moats within their respective, distinct niches.
In Financial Statement Analysis, both companies have similar revenue bases, but their financial profiles differ. Visteon's revenue growth has recently been stronger (TTM growth ~15%) driven by high demand for digital cockpits, compared to GTX's more modest ~8%. GTX, however, operates with significantly higher operating margins (~13% vs. Visteon's ~6%), reflecting its mature, high-margin core business. GTX also generates superior ROIC (~20%+ vs. Visteon's ~12%). Visteon has a very clean balance sheet with minimal net debt (Net Debt/EBITDA < 0.5x), which is stronger than GTX's (~1.5x). Visteon generates healthy free cash flow but less than GTX on a relative basis. Winner: Garrett Motion Inc. due to its vastly superior profitability and returns on capital, despite Visteon having lower leverage.
Looking at Past Performance over the last three years (2021-2023), Visteon has demonstrated stronger and more consistent revenue growth as its products are content-growth drivers on both ICE and EV platforms. GTX's performance has been more tied to the cyclical recovery of the ICE market. Margin trends favor GTX, which has maintained high profitability, while Visteon's margins have been improving but remain lower. Visteon's 3-year TSR of ~+25% has outperformed the broader supplier market and GTX's post-emergence performance. Winner: Visteon Corporation due to its superior growth and shareholder returns, reflecting its favorable positioning in a secular growth market.
For Future Growth, Visteon is better positioned for secular tailwinds. The value of cockpit electronics per vehicle is increasing regardless of powertrain type (ICE or EV), giving Visteon a clear growth runway. The company has a >$7B backlog of secured business. GTX's future growth depends on the much more uncertain and competitive transition to EV and hydrogen powertrains. While GTX's new tech is promising, Visteon's growth path is more predictable and less dependent on a complete business model transformation. Winner: Visteon Corporation, as its growth is driven by the established and ongoing trend of vehicle digitalization.
In terms of Fair Value, Visteon trades at a significantly higher valuation. Its forward P/E ratio is typically in the ~14-16x range, and its EV/EBITDA is around ~8-9x. This is more than double the multiples for GTX (~7x P/E, ~5.5x EV/EBITDA). Visteon's premium valuation is justified by its higher secular growth profile and more predictable business model. GTX is far cheaper on an absolute basis, but it comes with substantial risk about its core market's decline. Winner: Garrett Motion Inc. is the better value for investors seeking a deep value play with a turnaround thesis, while Visteon is priced for its expected growth.
Winner: Visteon Corporation over Garrett Motion Inc. Visteon is the superior investment due to its clearer and more certain growth trajectory. The company is a pure-play on the high-growth market of vehicle digitalization, a trend that is independent of the ICE-to-EV transition. This provides a more predictable earnings stream and has resulted in stronger shareholder returns. While Garrett Motion is a more profitable company today (Operating Margin ~13% vs. ~6%) and trades at a much lower valuation, its future is clouded by the monumental task of transitioning away from a declining market. Visteon's focused strategy and alignment with a powerful secular trend make it a less risky and more compelling long-term growth story.
Valeo SA is a major French global automotive supplier with a highly diversified portfolio spanning powertrain systems, thermal systems, comfort and driving assistance systems (ADAS), and visibility systems. This makes it a much larger and more diversified entity than Garrett Motion, which is primarily focused on powertrain technologies. Valeo's scale and broad exposure to key automotive growth trends, particularly in ADAS and electrification, present a formidable competitive challenge to a more specialized player like GTX.
In Business & Moat, Valeo's brand is globally recognized across a wide range of products, giving it deeper relationships with OEMs than GTX's more niche brand. Switching costs are high for both due to long product cycles. Valeo's massive scale (~€22B in annual revenue vs. GTX's ~€3.6B or ~$3.9B) provides significant advantages in R&D spending, manufacturing footprint (175 plants for Valeo vs. 35 for GTX), and purchasing power. Valeo is a leader in key technologies like ADAS sensors and lighting, creating a technology moat. GTX's moat is narrower but deeper within turbochargers. Winner: Valeo SA due to its overwhelming scale and diversification, which create a more resilient and powerful business model.
For Financial Statement Analysis, Valeo's massive revenue base dwarfs GTX's. Its recent revenue growth has been solid (TTM growth ~10%), comparable to GTX's ~8%. However, Valeo operates on much thinner margins, with a typical operating margin around ~3-4%, which is significantly lower than GTX's ~13%. Consequently, GTX generates far superior returns on capital (ROIC ~20%+ vs. Valeo's ~5-6%). Valeo carries a higher debt load, with a Net Debt/EBITDA ratio often above 2.5x, compared to GTX's leaner ~1.5x. Despite lower margins, Valeo's scale allows it to generate substantial free cash flow. Winner: Garrett Motion Inc., which demonstrates a much more profitable and financially efficient business model, albeit on a smaller scale.
Looking at Past Performance, over the last three years (2021-2023), both companies have seen revenues recover from pandemic lows. Valeo's growth has been driven by its strong position in ADAS and EV thermal management. GTX's performance has been more cyclical. Valeo's margins have been under pressure from inflation and R&D costs, while GTX's have remained robust. Valeo's 3-year TSR is approximately -40%, reflecting investor concerns over its profitability and leverage. GTX's stock has performed better since emerging from bankruptcy. Winner: Garrett Motion Inc. has delivered better financial performance in terms of profitability and, more recently, shareholder returns.
In terms of Future Growth, Valeo is extremely well-positioned to benefit from the mega-trends of electrification and autonomous driving. It is a market leader in ADAS sensors and has a comprehensive portfolio of EV powertrain and thermal management solutions, with a large order backlog. GTX's growth bets are more concentrated and in earlier-stage markets like hydrogen fuel cells. Valeo's diversified growth drivers provide a more balanced and higher-probability path to future expansion. Winner: Valeo SA has a superior and more diversified set of future growth drivers aligned with the most significant trends in the automotive industry.
Regarding Fair Value, Valeo often trades at what appears to be a discount, with a forward P/E ratio in the ~10-12x range and an EV/EBITDA multiple around ~4-5x. This is lower than many peers and reflects concerns about its low margins and high capital intensity. GTX trades at a lower P/E (~7x) but a slightly higher EV/EBITDA (~5.5x). Valeo offers a dividend (yield ~1.5%), unlike GTX. Given Valeo's weak profitability and high debt, its low multiples appear warranted. Winner: Garrett Motion Inc. offers a better value proposition, as its valuation is low despite its high profitability and stronger balance sheet.
Winner: Garrett Motion Inc. over Valeo SA. Although Valeo is a much larger and more diversified company with stronger exposure to long-term growth trends like ADAS and EVs, Garrett Motion is the superior company from a financial and investment perspective. GTX's business model is significantly more profitable, with operating margins (~13%) that dwarf Valeo's (~3%), leading to much higher returns on invested capital. Furthermore, GTX operates with a stronger balance sheet and trades at a more attractive valuation relative to its financial strength. Valeo's low profitability and high leverage create significant risks for equity holders, making its strategic advantages less appealing. Therefore, GTX's financial discipline and efficiency make it the better choice.
MAHLE GmbH is a major, privately held German automotive supplier and a direct competitor to Garrett Motion, particularly in engine components, filtration, and thermal management. As a private foundation-owned company, MAHLE operates with a different strategic horizon, often prioritizing long-term stability and technology leadership over short-term shareholder returns. Its product portfolio is broad, covering everything from engine systems for ICEs to thermal management solutions that are critical for EVs, placing it in direct competition with both GTX's legacy and growth businesses.
For Business & Moat, both MAHLE and GTX are deeply respected engineering firms with strong brands among OEMs. Switching costs are high for both. MAHLE's scale is a significant advantage, with annual sales of ~€12.8B, more than three times that of GTX (~€3.6B). This scale allows for extensive R&D investment across a wider range of technologies. MAHLE's moat is its integrated systems expertise, especially in thermal management, which is becoming increasingly critical for EV battery performance and efficiency. GTX's moat is its specialized excellence in turbocharger technology. Winner: MAHLE GmbH due to its superior scale and broader, more diversified technology portfolio relevant to both ICE and EV platforms.
In Financial Statement Analysis, as a private company, MAHLE's detailed financials are less transparent. However, based on public reports, the company has faced profitability challenges, with operating margins typically in the low single digits (~2-3%), often impacted by restructuring costs related to the EV transition. This is substantially lower than GTX's consistent double-digit margins (~13%). MAHLE has also carried a significant debt load to fund its transformation. In contrast, GTX's post-bankruptcy balance sheet is much healthier (Net Debt/EBITDA ~1.5x). GTX is demonstrably more profitable and financially efficient. Winner: Garrett Motion Inc. by a wide margin, due to its superior profitability and stronger balance sheet.
Looking at Past Performance, MAHLE, like many German suppliers, has struggled with the costs of transitioning away from the diesel and gasoline engine, where it has deep roots. It has undergone significant restructuring over the past five years, leading to volatile financial results and job cuts. GTX has also navigated its own major restructuring via bankruptcy but emerged as a financially robust entity. While direct TSR comparison is not possible, GTX's post-emergence operational performance has been more stable and profitable than MAHLE's publicly reported results. Winner: Garrett Motion Inc., which has achieved a more successful financial turnaround and maintains a more profitable business model.
In terms of Future Growth, both companies are pursuing a 'dual strategy' of optimizing their ICE business while investing heavily in future technologies. MAHLE's growth is centered on its leadership in thermal management for EVs (battery cooling, cabin heating), as well as new e-compressors and electric motors. Its broad portfolio gives it many avenues for growth. GTX is more focused on e-compressors for fuel cells, E-axles, and software. MAHLE's established leadership in thermal systems, a universal need for EVs, gives it a more secure growth path. Winner: MAHLE GmbH, as its core competencies in thermal management are more directly and broadly applicable to the entire EV market.
Regarding Fair Value, a direct valuation comparison is not feasible as MAHLE is privately held. However, we can infer its value is under pressure due to its low profitability and the high costs of its transformation. GTX's public valuation (EV/EBITDA ~5.5x) is low, reflecting the risks of its own transition but is based on very strong profitability and cash flow. If MAHLE were public, it would likely trade at a lower multiple on sales but a higher multiple on its depressed earnings. Winner: Garrett Motion Inc., which offers a transparent, publicly-traded security at a low valuation backed by high-quality financials.
Winner: Garrett Motion Inc. over MAHLE GmbH. While MAHLE is a larger, more diversified competitor with a strong strategic position in the critical field of automotive thermal management, Garrett Motion is a fundamentally stronger company from a financial standpoint. GTX's lean cost structure and dominant market position in turbos allow it to generate industry-leading operating margins (~13%) and high returns on capital, a feat MAHLE has struggled to achieve (margins ~2-3%). This superior profitability and a cleaner balance sheet give GTX the financial firepower to invest in its future without the distress that has characterized MAHLE's recent years. Although MAHLE's strategic direction is sound, GTX's proven ability to operate efficiently and profitably makes it the more compelling entity.
Tenneco Inc., now a private company owned by Apollo Global Management, has long been a key competitor in the automotive supplier space, although with a different product focus than Garrett Motion. Tenneco operates through several segments, including Clean Air (exhaust systems), Performance Solutions (suspension and braking), Powertrain, and Motorparts (aftermarket). Its Clean Air and Powertrain businesses compete most directly with GTX, as both are focused on optimizing the performance and emissions of internal combustion engines. Tenneco's 2022 privatization reflects the challenges and value proposition seen by private equity in legacy auto-parts suppliers.
In Business & Moat, both companies have established brands and long-standing OEM relationships. Switching costs are similarly high. Tenneco's scale before being taken private was larger than GTX's, with revenues in the ~$18B range, though this was spread across more diverse segments. Tenneco's moat lies in its breadth of products and its strong position in the aftermarket, which provides a more stable revenue stream than the cyclical OEM business. GTX's moat is its technological leadership in the highly concentrated turbocharger market. Winner: Tenneco Inc. due to its greater diversification and its valuable, counter-cyclical aftermarket business.
For Financial Statement Analysis, prior to its privatization, Tenneco consistently struggled with profitability and a heavy debt load. Its operating margins were typically in the low-to-mid single digits (~3-5%), significantly underperforming GTX's ~13%. Tenneco's balance sheet was highly leveraged (Net Debt/EBITDA often > 3.5x), a key reason it became a private equity target. GTX's post-restructuring financials are far superior, with higher margins, better returns, and a much more manageable debt level (~1.5x Net Debt/EBITDA). Winner: Garrett Motion Inc., which operates a much more profitable and financially sound business.
Looking at Past Performance, in the years leading up to its acquisition (2019-2022), Tenneco's stock performance was poor, plagued by integration issues from its acquisition of Federal-Mogul, margin compression, and high debt. The company faced consistent restructuring charges that weighed on its earnings. GTX, despite its own bankruptcy process, has demonstrated superior operational execution and profitability during the same period. GTX's ability to maintain high margins through market cycles stands in stark contrast to Tenneco's struggles. Winner: Garrett Motion Inc. has a track record of superior operational and financial performance.
In terms of Future Growth, Tenneco's new owner, Apollo, is likely focused on operational improvements, cost-cutting, and deleveraging to create value. Growth will be centered on optimizing its existing product lines and leveraging its aftermarket strength. GTX, as a public company, is more focused on a narrative of technological transformation, investing its strong cash flows into new EV and hydrogen technologies. GTX's strategy is higher-risk but offers significantly more upside potential if its new technologies gain traction. Tenneco's path is one of optimization rather than reinvention. Winner: Garrett Motion Inc. has a more ambitious and technology-forward growth strategy, aiming to capture new markets.
Regarding Fair Value, Tenneco was taken private at an enterprise value of ~$7.1B, which represented an EV/EBITDA multiple of roughly ~5.5x on its forward estimates at the time. This is very similar to where GTX currently trades (EV/EBITDA ~5.5x). However, GTX's EBITDA is of much higher quality due to its superior margins. The fact that a sophisticated financial sponsor paid a similar multiple for a lower-quality business highlights the potential deep value in GTX's shares. Winner: Garrett Motion Inc. offers a similar valuation for a demonstrably superior business, making it the better value.
Winner: Garrett Motion Inc. over Tenneco Inc. Garrett Motion is a decisively stronger company than Tenneco. While Tenneco has greater scale and a valuable aftermarket business, it has historically been burdened by low margins (~3-5%), high leverage, and operational inefficiencies that ultimately led to its sale. In stark contrast, Garrett Motion is a highly profitable, cash-generative business with industry-leading margins (~13%) and a strong, post-restructuring balance sheet. GTX's valuation is similar to what Tenneco was acquired for, yet it is a fundamentally healthier and more efficient enterprise. GTX's focused strategy of funding its technological pivot from a position of financial strength is superior to Tenneco's path of private equity-led restructuring.
IHI Corporation is a major Japanese heavy-industry conglomerate with operations spanning aerospace, energy, and industrial machinery. Its rotating machinery division is one of the world's top three producers of turbochargers, making it a direct and formidable competitor to Garrett Motion. Unlike GTX, however, IHI's turbocharger business is just one part of a much larger, highly diversified industrial enterprise. This structure gives IHI financial stability and cross-divisional technology synergies but can also lead to less focus compared to a pure-play like GTX.
In Business & Moat, both IHI and GTX are technology leaders in turbochargers with powerful brands among Japanese and global OEMs, respectively. Switching costs are high for both. IHI's overall corporate scale is vast (~¥1.3T or ~$8.5B in revenue), but its turbo business is closer in size to GTX's. IHI's moat is bolstered by the financial strength of its parent company and deep, long-standing relationships with Japanese automakers like Toyota and Honda. GTX's moat is its singular focus and agility as an independent player. Winner: IHI Corporation, as its backing from a large, stable industrial conglomerate provides greater financial resilience and R&D resources.
For Financial Statement Analysis, IHI's overall corporate operating margins are typically in the ~5-7% range, reflecting the diverse and often lower-margin nature of its heavy-industry projects. This is significantly below GTX's consistent ~13% operating margin. IHI's balance sheet is also more leveraged due to the capital-intensive nature of its other businesses. GTX, with its focused, high-margin model and post-bankruptcy balance sheet (Net Debt/EBITDA ~1.5x), is the more profitable and financially efficient entity on a standalone basis. Winner: Garrett Motion Inc. for its superior profitability, higher returns on capital, and stronger balance sheet.
Looking at Past Performance, IHI's overall business is subject to different cycles, including aerospace and infrastructure spending, making a direct comparison difficult. Its turbocharger business has performed in line with the global auto market. IHI's stock has seen significant volatility, with a 3-year TSR of ~+60%, driven by factors beyond automotive, such as defense and energy. GTX's performance since re-listing has also been strong but more purely tied to the automotive cycle and its own transformation story. In their shared market, both have performed well, but GTX's financial discipline has been more consistent. Winner: Garrett Motion Inc. for demonstrating better and more stable profitability within the core automotive segment.
In terms of Future Growth, IHI is leveraging its expertise in gas turbines and rotating machinery to pursue growth in hydrogen and ammonia-based energy solutions, a strategy that parallels GTX's move into hydrogen fuel cell compressors. IHI's diversification means it has multiple paths to growth, reducing its reliance on the automotive sector's uncertain transition. GTX's growth is more singularly focused on making its automotive technology pivot successful. IHI's broader industrial focus may give it an edge in the long-term hydrogen economy. Winner: IHI Corporation has more diversified and potentially larger-scale growth opportunities in the broader energy transition, making it less risky.
Regarding Fair Value, IHI trades at a forward P/E ratio of ~10-12x and an EV/EBITDA multiple of ~6-7x. This is a premium to GTX's valuation (~7x P/E, ~5.5x EV/EBITDA). The market awards IHI a higher multiple for its diversification and its exposure to other promising sectors like aerospace and clean energy, despite its lower overall profitability. GTX's lower valuation reflects its concentration risk in the automotive sector. Winner: Garrett Motion Inc. is the better value, offering superior profitability and cash generation at a lower multiple.
Winner: Garrett Motion Inc. over IHI Corporation. In a direct comparison of their competing businesses, Garrett Motion is the stronger operator. GTX's singular focus on powertrain technology allows it to achieve superior operating margins (~13% vs. IHI's corporate average of ~6%) and higher returns on capital. While IHI benefits from the stability and resources of its parent conglomerate, this diversification also leads to lower overall profitability. For an investor seeking exposure to the automotive powertrain technology space, GTX offers a more efficient, more profitable, and more attractively valued vehicle. IHI's strengths lie in its diversification, but this comes at the cost of the financial performance that makes GTX stand out in its field.
Based on industry classification and performance score:
Garrett Motion has a strong competitive moat in its core turbocharger business, thanks to its advanced technology, global scale, and deep, long-term relationships with major automakers. This established position provides predictable revenue from its legacy products. However, this entire advantage is tied to the internal combustion engine, which is a market in long-term decline due to the shift to electric vehicles. The company's efforts to pivot into EV and hydrogen technologies are still in the early stages and face intense competition. The investor takeaway is mixed; Garrett Motion has a solid, cash-generating present but a highly uncertain and challenging future.
The company's revenue from EV-related products is still minimal, and its R&D spending is not high enough to guarantee a successful pivot against larger competitors.
Garrett Motion's transition to electrification-ready content is in its early stages, representing a significant weakness in its long-term moat. Revenue from EV, hybrid, and hydrogen platforms constitutes a very small portion of total sales, likely less than 5%. Its R&D spending as a percentage of sales was around 4.3% in 2023, which is only average for the auto supplier industry (4-6%). For a company that needs to fundamentally reinvent its core technology, this level of investment may be insufficient to out-innovate larger, better-capitalized competitors who are also spending billions on EV technology. While Garrett has secured some design wins for its E-Compressors for fuel cells and other E-Boosting technologies, these are not yet at a scale to offset the eventual decline of the turbocharger business. This lack of a proven, scaled portfolio of EV-ready content is the most significant risk to the durability of its business.
As a market leader for a mission-critical component, Garrett's strong reputation for quality and reliability is a key competitive advantage and a significant intangible asset.
Garrett Motion passes this factor due to its established leadership and reputation in a product category where quality is paramount. Turbochargers are highly stressed components that operate at extreme temperatures and speeds; a failure can lead to catastrophic engine damage and costly recalls for automakers. Garrett's ability to maintain a leading market share for decades serves as strong evidence of its superior quality and reliability. While specific metrics like PPM defect rates are not publicly disclosed, the company's status as a preferred supplier to nearly every major global OEM is a testament to its process control and product dependability. This reputation for quality is a crucial intangible asset that builds trust with customers and acts as a significant barrier to entry for potential competitors.
With manufacturing facilities spread across the globe and decades of experience supplying major automakers, Garrett has the necessary scale and execution capabilities to compete effectively.
Garrett Motion demonstrates the global scale required to be a leading Tier 1 automotive supplier. The company operates 13 manufacturing sites strategically located in key automotive production regions like Europe, Asia, and North America, enabling it to deliver products to its OEM customers on a just-in-time (JIT) basis. This global footprint is a significant barrier to entry and a key reason for its long-standing relationships with nearly every major global automaker. While its inventory turnover ratio of approximately 6.5x is on the lower end of the typical industry range of 6x to 12x, suggesting there may be room for efficiency improvements, its proven track record of reliable global delivery is a core operational strength. This scale and execution capability are essential for winning and retaining large, multi-year platform awards.
Garrett Motion's narrow focus on powertrain components limits its content per vehicle, making it vulnerable as that content becomes obsolete in electric vehicles.
Garrett Motion fails this factor because its product portfolio is highly specialized and lacks the breadth to capture a large dollar value of content per vehicle compared to diversified mega-suppliers. While a turbocharger is a high-value, critical system, the company primarily supplies just this single major component group. In contrast, competitors like Bosch or Continental can supply dozens of systems, from brakes and chassis controls to infotainment and advanced driver-assistance systems (ADAS). Garrett's gross margin of approximately 17.5% is in line with the industry average for core suppliers (15-20%), indicating it doesn't possess superior pricing power that would suggest uniquely valuable content. This narrow focus presents a significant risk as the industry shifts to BEVs, where its core turbocharger content becomes zero, and it must compete from a much smaller base to win new electrification content.
The company's business model is built on long-term, sticky contracts with automakers, which provides excellent revenue visibility and high switching costs for its core products.
Garrett Motion's business has a strong moat derived from sticky, multi-year platform awards. Once an OEM designs a Garrett turbocharger into a vehicle's engine, the switching costs for the OEM become prohibitively high for the entire 5-7 year life of that vehicle program. This is due to the deep engineering integration and extensive validation required. This dynamic locks in revenue and provides high visibility. The company's customer base, which includes Ford (11% of 2023 revenue), Volkswagen Group (10%), and Daimler (9%), demonstrates deep integration with the world's leading automakers. While customer concentration is a risk, it also reflects the strength of these partnerships. This baked-in customer stickiness is a powerful defensive advantage for Garrett's legacy business.
Garrett Motion currently shows a sharp contrast between its operational strength and its balance sheet risk. The company is highly profitable, with a recent quarterly operating margin of 14.41%, and generates substantial free cash flow, reporting $90 million in the most recent quarter. However, this is set against a precarious balance sheet with $1.54 billion in total debt and a negative shareholders' equity of -$813 million. This means the company's liabilities are greater than its assets. The investor takeaway is mixed: while the business operations are performing very well, the high leverage and negative equity introduce significant financial risk.
The company fails this check due to a risky balance sheet characterized by negative shareholders' equity and high debt, despite having enough earnings to cover interest payments.
Garrett Motion's balance sheet is a major concern and poses a significant risk to investors. As of the most recent quarter (Q3 2025), the company reported a negative shareholders' equity of -$813 million. This means its total liabilities ($3.25 billion) exceed its total assets ($2.44 billion), leaving no book value for equity holders. The company also carries a substantial debt load of $1.54 billion. While its recent Debt-to-EBITDA ratio of 2.47x is manageable from a cash flow perspective, the fundamental solvency issue represented by negative equity cannot be overlooked. On a positive note, the company's strong operating income (EBIT of $130 million in Q3) provides ample coverage for its interest expense ($29 million), mitigating immediate default risk. However, the lack of an equity cushion makes the company highly vulnerable to any downturn in the cyclical auto industry. Information on undrawn credit lines and debt maturity was not provided.
This factor cannot be assessed as the company does not disclose data on its customer concentration, which remains an unknown risk for investors.
An analysis of customer and program concentration is not possible with the provided financial data. Garrett Motion does not disclose the percentage of revenue coming from its top customers or largest vehicle programs. This lack of transparency means investors cannot gauge the risk of the company being overly reliant on a few large automakers like Ford, Volkswagen, or Stellantis. In the auto components industry, high concentration is common and represents a material risk, as the loss of a single major program or a downturn at a key customer can significantly impact revenue and profits. Without this data, a key risk factor for the business remains unquantified.
The company passes this test with strong and stable margins, indicating it can effectively manage costs and pass through price increases to its customers.
Garrett Motion demonstrates a robust and consistent margin profile, which is a significant strength. Its gross margin has remained stable, recording 20.62% in Q3 2025, 19.82% in Q2 2025, and 20.29% for the full year 2024. More impressively, its operating (EBIT) margin is also strong and steady, at 14.41% in the most recent quarter. For an auto components supplier, maintaining double-digit operating margins is a sign of strong commercial discipline, technological leadership, and an ability to pass on inflationary pressures (like raw material and labor costs) to its OEM customers. This stability suggests the company has a solid competitive position and is not simply a low-cost, commodity provider.
The company's investment levels in CapEx appear low and productive, supporting strong returns on capital, though specific R&D spending is not disclosed.
Garrett Motion demonstrates high productivity from its investments. Capital expenditures (CapEx) are relatively low, running at just $10 million in Q3 2025 and $15 million in Q2 2025. This translates to a CapEx as a percentage of sales of just 1.1% in the latest quarter, suggesting investments are focused on maintenance and high-return projects rather than costly expansion. This capital discipline contributes to very strong returns, with the latest Return on Capital Employed reported at 47.3%, a very high figure indicating efficient use of its asset base to generate profits. Data on R&D spending as a percentage of sales was not explicitly provided in the financial statements, making it difficult to assess innovation investment directly. However, the high returns on capital suggest that overall investment is being managed effectively.
The company excels at converting profit into cash, with operating and free cash flow consistently strong and well above net income.
Garrett Motion has excellent cash conversion discipline. In the last two quarters, its operating cash flow ($100 million in Q3, $158 million in Q2) has been substantially higher than its net income ($77 million in Q3, $87 million in Q2). This demonstrates high-quality earnings and efficient management of working capital. After funding modest capital expenditures, the company generated impressive free cash flow (FCF) of $90 million in Q3 and $143 million in Q2, resulting in a healthy FCF Margin of 9.98% in the latest quarter. The company's ability to consistently turn sales into disposable cash provides significant financial flexibility for debt service, share buybacks, and dividends.
Garrett Motion's past performance is a story of two distinct periods defined by its emergence from bankruptcy in 2021. Since then, its operational performance has been strong, with stable operating margins around 13.5% and robust annual free cash flow consistently exceeding $300 million. However, this strength is overshadowed by a volatile revenue history and the severe consequences of its financial restructuring. The company's share count more than tripled from 65 million in 2022 to 222 million in 2024, causing a collapse in per-share metrics. The investor takeaway is mixed: while the core business appears operationally healthy today, its financial history carries significant baggage, including a weak balance sheet and massive shareholder dilution.
Revenue trends have been inconsistent over the last five years, with periods of strong growth followed by declines, failing to show a clear pattern of sustained market share gains.
Garrett Motion's revenue history lacks consistency. After declining 6.6% in 2020, revenue rebounded strongly by 19.7% in 2021 as the auto market recovered. However, the years since have been choppy, with a 0.8% dip in 2022, 7.9% growth in 2023, and a significant 10.6% contraction in 2024. This volatile top-line performance does not support a narrative of a company consistently gaining market share or growing its content per vehicle (CPV) ahead of the market. Instead, it appears highly sensitive to the auto industry's production cycles and other external pressures, which is typical for the industry but not indicative of outperformance.
Direct Total Shareholder Return (TSR) data is not provided, but the investment case is clouded by extreme share dilution, which has likely been detrimental to long-term, per-share returns.
While specific 1, 3, and 5-year TSR figures are unavailable, the historical context strongly suggests a difficult period for shareholders. The most critical factor impacting returns has been the massive dilution following the company's restructuring, where shares outstanding ballooned from 65 million in 2022 to 222 million in 2024. This 241% increase means that an investor's ownership stake was significantly diluted, which mathematically harms per-share returns. Although the stock's 52-week price range ($7.02 to $17.91) shows strong recent momentum, it doesn't erase the damage from the dilution. Without clear data showing sustained outperformance against peers that accounts for this share issuance, the historical return profile must be viewed negatively.
No specific data is available on launch execution or product quality metrics, making it impossible to assess this crucial operational factor from the provided financials.
The provided financial data does not contain key performance indicators needed to evaluate Garrett Motion's track record on program launches and quality. Metrics such as on-time launch percentages, warranty costs as a percentage of sales, or field failure rates (PPM) are absent. While the company's stable gross margins, which have hovered around 19-20% since 2021, could indirectly suggest good operational control with minimal quality-related cost overruns, this is merely an inference. For an auto components supplier, where success is heavily dependent on reliable execution and winning future OEM contracts, this lack of direct evidence is a significant blind spot for investors.
The company has generated strong and consistent free cash flow since 2022, but aggressive buybacks consume nearly all of it, while massive historical dilution has severely damaged per-share returns.
Garrett Motion's ability to generate cash has improved dramatically since its 2021 restructuring. For the past three fiscal years, free cash flow (FCF) has been robust and reliable, recording $284 million in 2022, $382 million in 2023, and $317 million in 2024. This consistency is a significant strength. However, the company's capital return policy is very aggressive. In FY2024, it spent $304 million on share repurchases, which is equivalent to 96% of its FCF for the year. While buybacks can return value to shareholders, this high payout leaves little cash for debt reduction from its remaining $1.5 billion debt load or for weathering any unexpected downturns. Furthermore, the returns on a per-share basis are undermined by the tripling of the share count since 2022.
Garrett Motion has demonstrated impressive operating margin stability in the `13-14%` range over the past four years, even as revenue fluctuated, indicating strong cost controls and pricing power.
A standout feature of Garrett Motion's past performance is its margin resilience. After a dip to 9.36% in 2020, the company's operating margin has been remarkably consistent: 13.87% (2021), 13.99% (2022), 13.28% (2023), and 13.76% (2024). This stability is a significant strength in the cyclical auto supplier industry. It was maintained even as revenue grew 19.7% one year and fell 10.6% another, suggesting the company has effective long-term contracts, disciplined cost management, and an ability to manage pricing, which are all hallmarks of a well-run industrial business.
Garrett Motion's future growth prospects are fundamentally challenged by its reliance on the declining internal combustion engine (ICE) market. While its stable aftermarket business provides a valuable cash flow stream, this only serves to fund a high-stakes pivot into zero-emission vehicle (ZEV) technologies. The company's success in new areas like electric compressors is far from certain, as it faces intense competition from larger, better-funded suppliers. This creates a classic 'melting ice cube' scenario where the legacy business erodes while the new business struggles to scale. The investor takeaway is decidedly mixed, leaning negative, due to the significant execution risk in this necessary but difficult transition.
The company's pipeline in core EV growth areas like thermal management and e-axles is virtually non-existent, as its focus is on niche ZEV components.
Garrett Motion has not developed a meaningful product portfolio or pipeline in the largest EV growth areas like thermal management or e-axles. Its future growth bets are placed on more niche applications like E-Compressors for hydrogen fuel cells and E-Boosting for hybrids. Revenue from these new technologies is still minimal, estimated at less than 5% of total sales. Without a strong offering in the highest-volume EV component markets, the company lacks a clear path to generating revenue at a scale that can replace its declining turbocharger business. This failure to establish a foothold in mainstream EV systems represents a significant weakness in its future growth strategy.
Garrett Motion has no presence in the automotive safety systems market, so this industry tailwind provides no growth opportunity for the company.
This factor is not applicable to Garrett Motion's business and represents a clear fail. The company operates exclusively in the powertrain and engine components sector. It does not design, manufacture, or sell any products related to vehicle safety, such as airbags, braking systems, restraints, or advanced driver-assistance systems (ADAS). Therefore, the strong secular growth driven by increasing regulatory requirements for safety content per vehicle is a tailwind that Garrett is completely unexposed to. Its specialized focus on powertrain means it cannot benefit from this significant industry growth driver.
Lightweighting is not a core competency or a significant growth driver for Garrett Motion, whose products are focused on powertrain efficiency.
While lightweighting is a crucial trend in the auto industry for improving EV range and overall efficiency, it is not a direct growth driver for Garrett Motion. The company's expertise lies in aerodynamics and rotating machinery for powertrains, not in lightweight materials or structural components. Its products, like turbochargers, are valued for their performance and emissions reduction, not their weight savings. As the industry shifts to EVs, the efficiency gains from turbocharging become obsolete. Garrett does not have a portfolio of lightweighting products to capitalize on this trend, making it an irrelevant factor for its future growth.
The aftermarket business provides a stable, higher-margin revenue stream that is critical for funding the company's transition to new technologies.
Garrett Motion's aftermarket segment is a key strength for its future, providing resilience as its core OEM business faces a structural decline. With aftermarket revenue of 459.00M and showing slight growth (0.66%) in a challenging year, this business acts as a vital source of cash flow. This segment services the large and existing fleet of turbocharged vehicles, which will need replacement parts for years to come. These sales typically carry higher gross margins than OEM platform awards. This stability and profitability are essential, as they provide the necessary funds for Garrett to invest in the research and development of new technologies for electric and hydrogen vehicles. While not a high-growth engine itself, its role as a financial stabilizer is crucial for the company's long-term survival and potential pivot.
The company already possesses a strong, globally diversified footprint and a balanced OEM customer base, providing a stable foundation.
Garrett Motion already has excellent geographic and OEM diversification, which serves as a solid base but offers limited new growth runway. With significant revenue from Europe (1.64B), the United States (700.00M), and China (643.00M), the company is well-positioned in all major automotive markets. Its customer base includes nearly every major global OEM, reducing reliance on any single automaker. While this diversification is a strength that helps smooth regional downturns, there are few untapped 'white space' regions or major OEMs left to penetrate. Therefore, future growth must come from selling new products to these existing customers rather than from geographic or customer expansion.
As of December 26, 2025, with a stock price of $17.71, Garrett Motion Inc. appears undervalued. This conclusion is based on the company's powerful free cash flow generation, deeply discounted valuation multiples compared to peers and its own history, and an exceptionally high return on invested capital that is not yet reflected in its stock price. Key indicators supporting this view include a low Price to Free Cash Flow ratio of 9.11, a trailing P/E ratio of 11.08, and a robust FCF Yield of approximately 11%. Despite trading near its 52-week high, the company's valuation metrics suggest a significant margin of safety. The primary investor takeaway is positive: the market appears to be overly focused on the long-term risks of the EV transition while undervaluing the firm's current cash-generating capabilities and operational excellence.
A conceptual sum-of-the-parts suggests the highly profitable and stable aftermarket business is being undervalued by the market, providing a floor to the valuation while offering the EV/hydrogen segment as a low-cost call option.
A formal sum-of-the-parts (SOTP) analysis is difficult without segmented EBITDA disclosures. However, we can analyze it conceptually. The business has two main components: 1) The core OEM turbo business (ICE and hybrid), which faces long-term decline but is currently highly profitable. 2) The high-margin, stable aftermarket business (~12-15% of revenue). The aftermarket segment, with its higher margins and lower cyclicality, likely deserves a higher multiple (e.g., 6-8x EBITDA) than the core OEM segment (e.g., 4-5x EBITDA). Given the company's total EV/EBITDA multiple is 7.80x, it's plausible that the blended multiple is undervaluing the stable aftermarket cash flows. More importantly, this valuation seems to assign little to no value to the company's nascent but potentially significant ventures in hydrogen fuel cell compressors and EV technologies. Investors are essentially paying a fair price for the legacy cash flows and getting the potential upside from the technology pivot for free.
The company's massive spread between its Return on Invested Capital (~43%) and its cost of capital (~5.5-7.0%) is a clear sign of elite operational quality and value creation that merits a higher valuation.
Garrett Motion demonstrates exceptional capital efficiency. Its Return on Invested Capital (ROIC) is reported to be between 32.8% and 43.3%. Its Weighted Average Cost of Capital (WACC) is estimated to be between 5.45% and 7.0%. This creates an enormous ROIC-WACC spread of over 25 percentage points. This signifies that for every dollar of capital invested in the business, the company generates a return far exceeding its cost of financing. Such a high spread is the hallmark of a high-quality business with a strong competitive moat. Despite this elite performance, the stock trades at a valuation multiple typical of an average or struggling auto supplier, presenting a clear disconnect between operational quality and market valuation.
Garrett's EV/EBITDA multiple of 7.80x is at a substantial discount to the broader peer average, a gap that is not justified by its stronger-than-average margins and stable cash flows.
The Enterprise Value to EBITDA ratio is a key metric for comparing companies with different debt levels. Garrett's TTM EV/EBITDA is 7.80x. This compares favorably to peers like BorgWarner, whose multiple is higher at 17.14x. The discount is stark considering Garrett’s superior operational performance. Its EBITDA margin of ~17% ($602M EBITDA / $3.54B Revenue) is exceptionally strong for an auto supplier. The market is applying this discount due to the perceived risk of Garrett's revenue base declining with the phase-out of ICE vehicles. However, the magnitude of the discount appears excessive given the company's high and stable profitability and strong cash generation, which provide the means to manage its debt and fund its technological pivot.
The stock's forward P/E ratio of 11.27 appears low, given its industry-leading margins and the fact that current earnings are not at a cyclical peak.
Garrett Motion trades at a forward P/E ratio of 11.27x. While this is in line with peers like Visteon (10.64x) and BorgWarner (9.62x), it fails to account for Garrett's superior profitability. As established in prior analyses, Garrett's operating margins of ~14% are significantly higher than most auto suppliers. In a cyclical industry, paying a low multiple is attractive, especially when earnings aren't inflated at the top of a cycle. With auto production facing headwinds and a technological transition, current EPS forecasts are unlikely to be overly optimistic. Therefore, a P/E multiple near 11x for a business with best-in-class margins and strong cash conversion signals undervaluation.
Garrett's FCF yield is exceptionally high, suggesting the market is mispricing its strong cash generation capabilities relative to its peers.
Garrett Motion's trailing twelve-month free cash flow stands at $372 million against a market cap of $3.39 billion, resulting in an FCF yield of approximately 11.0%. This is a powerful signal of value. For comparison, many stable industrial companies trade at yields in the 5-7% range. This high yield indicates that the company generates a substantial amount of cash relative to its stock price, which can be used for deleveraging, share buybacks, and investing in new technologies. The prior financial analysis confirmed this strength, highlighting a Debt-to-EBITDA ratio of 2.47x, which is manageable for a business with such potent cash flow. A high FCF yield provides a significant margin of safety; even if earnings decline, the cash return to investors remains robust.
The most significant long-term risk facing Garrett Motion is the structural decline of the internal combustion engine. The company's legacy business is built on selling turbochargers, a component essential for modern gasoline and diesel engines but entirely absent in battery electric vehicles. With governments worldwide, particularly in Europe and China, setting aggressive timelines to phase out ICE vehicle sales, Garrett is in a race against time. The core challenge is whether its declining, but still cash-generative, turbo business can fund the necessary research and development to build a leading position in new areas like electric boosting (E-boosting) and hydrogen fuel cell compressors before its legacy market disappears. A faster-than-expected consumer shift to EVs would severely pressure revenue and profitability.
Beyond this technological shift, Garrett is exposed to significant macroeconomic and industry-specific pressures. The automotive industry is famously cyclical, meaning sales volumes can drop sharply during economic recessions or periods of high interest rates, directly impacting Garrett's orders and revenue. The company also faces intense competition from larger rivals like BorgWarner, who are also investing heavily in electrification technologies. This competitive landscape could pressure profit margins and limit market share gains in new product segments. Additionally, regulatory risk remains high; any acceleration of emissions regulations or ICE-vehicle bans would shrink Garrett's addressable market even faster than currently projected.
From a company-specific standpoint, balance sheet management is a key vulnerability to monitor. Garrett emerged from Chapter 11 bankruptcy in 2021, and while it has made progress in reducing its debt, it must maintain financial discipline. High leverage could constrain its ability to make crucial investments in innovation or weather a prolonged industry downturn. Like many auto suppliers, the company also faces customer concentration risk, where the loss of a contract from a single major automaker could have a material impact on its financial results. The successful execution of its pivot to new technologies is not guaranteed and represents a major operational risk for the coming years.
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