Results: Garrett Motion Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

As you might know, Garrett Motion Inc. (NASDAQ:GTX) just kicked off its latest second-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 3.0% to hit US$1.0b. Garrett Motion reported statutory earnings per share (EPS) US$0.27, which was a notable 18% above what the analyst had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.

See our latest analysis for Garrett Motion

After the latest results, the lone analyst covering Garrett Motion are now predicting revenues of US$4.02b in 2023. If met, this would reflect a reasonable 5.2% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Garrett Motion forecast to report a statutory profit of US$0.99 per share. In the lead-up to this report, the analyst had been modelling revenues of US$3.98b and earnings per share (EPS) of US$0.96 in 2023. The analyst seem to have become more bullish on the business, judging by their new earnings per share estimates.

The analyst has been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 146% to US$15.00.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analyst is definitely expecting Garrett Motion's growth to accelerate, with the forecast 11% annualised growth to the end of 2023 ranking favourably alongside historical growth of 3.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. So it's clear that despite the acceleration in growth, Garrett Motion is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Garrett Motion's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Garrett Motion. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Garrett Motion (2 don't sit too well with us!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.