Shares of Garrett Motion surged 8.4% to $30.88 after the turbocharger maker posted second-quarter results that topped Wall Street on nearly every metric and lifted its full-year outlook for the second consecutive quarter. The rally snaps a rough stretch — the stock had fallen roughly 15% over the prior four weeks — and forces a fresh look at whether Garrett's pivot beyond traditional engines can sustain the momentum.
The Numbers Were Hard to Argue With
Revenue hit $976 million, beating the $944.9 million consensus by 3.3%, while GAAP EPS of $0.53 topped estimates of $0.46 by 14.8%.
Adjusted operating profit (EBIT) reached a record $152 million, a 15.6% margin — up $28 million year-over-year.
Gross profit climbed to $212 million, with its margin widening to 21.7% from 19.8% a year ago — a sign that Garrett is earning more on each dollar of sales, not just selling more.
A Guidance Raise Signals Real Confidence
For full-year 2026, management now targets net sales of $3.8 billion, adjusted EBIT of $580 million, and adjusted free cash flow of $430 million.
The sales range was lifted to $3.6–$3.9 billion from a prior $3.6–$3.8 billion , and net income guidance rose to $300–$360 million from $295–$335 million previously . Back-to-back raises after Q1 and Q2 suggest this isn't just one good quarter — the underlying business is outperforming management's own plans.
The Big Bet: Data Centers and Electric Cooling The strategic story matters as much as the beat. Garrett secured its first award for a turbo designed specifically for data center power generation , while CEO Olivier Rabiller said industrial sales are tracking toward $200 million this year . The company also partnered with TONFY to deploy its oil-free compressor technology in battery energy storage cooling systems . These non-auto revenue streams are critical: they help insulate Garrett if electric vehicle adoption eventually shrinks demand for traditional turbochargers.
Valuation Still Looks Cheap — If You Trust the Transition
Trailing 12-month sales of roughly $3.75 billion are close to where they were five years ago , which explains the discount. Yet analysts have been raising targets — Stifel to $36, BWS Financial to $42 . At ~10x forward earnings, the stock prices in modest growth, meaning any proof that the industrial and electrification bets are scaling could unlock significant upside.