Garrett Motion Inc. (spun out of Honeywell) designs, manufactures and sells highly engineered turbocharger and electric boosting technologies for light and commercial vehicle original equipment manufacturers and the aftermarket.
GTX Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Garrett Motion Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Garrett Motion Inc ranked in the 23th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. The most interesting components of our discounted cash flow analysis for Garrett Motion Inc ended up being:
Its compound free cash flow growth rate, as measured over the past 1.2 years, is -0.43% -- higher than merely 2.5% of stocks in our DCF forecasting set.
Garrett Motion Inc's weighted average cost of capital (WACC) is 5%; for context, that number is higher than only 0.66% of tickers in our DCF set.
As a business, Garrett Motion Inc experienced a tax rate of about 3% over the past twelve months; relative to its sector (Consumer Cyclical), this tax rate is higher than only 20.6% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Garrett Motion Inc? See ARD, WW, SALM, WEYS, and BBBY.
At this time, I'd like to hand the call over to Paul Blalock, VP of investor relations. Before we begin, I'd like to mention that today's presentation and press release are available on the Garrett Motion website at garrettmotion.com, where you will also find links to our SEC filings, along with other important information about Garrett. Turning to Slide 2, we note that this presentation contains forward-looking statements regarding our business, prospects, goals, strategies, anticipated financial performance, payments to Honeywell and the anticipated impact of the coronavirus on our business.