Garrett Motion just dropped Q3 2026 numbers that show profits holding up, while the stock told a very different story. Shares slid about 7% today to US$20.91, extending a tough three month stretch that has already taken roughly 33% off the price.
The headline is that profitability, not sales volume, set the tone. Net income reached US$97 million with basic earnings per share at about US$0.52, and management leaned hard into an improved margin picture. Traders focused on recent share price pressure, while the underlying business pointed to a market mood that looks more anxious than the earnings line suggests.
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Q3 2026 Earnings Summary
- Revenue (Q3 2026 vs. Q3 2025): US$930 million vs. US$902 million (up about 3.1%)
- Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): US$97 million vs. US$77 million (up about 26.0%)
- Basic EPS (Q3 2026 vs. Q3 2025): US$0.52 vs. US$0.39 (up about 35.1%)
- Adjusted EBIT Margin (Q3 2026 vs. Q3 2025): 16.3% vs. roughly 14.7% (up about 160 bps, or 1.6 percentage points)
Industrial just became Garrett Motion’s standout growth engine. Ask Charlie what makes Garrett Motion's industrial growth less cyclical.
Garrett Motion’s Q3 Tests Its Product-Pipeline Hopes
Garrett Motion’s bullish story hinges on new technologies moving from talk to tangible progress. The key claim is clear.
"Progress in oil free and industrial cooling compressors for HVAC and battery energy storage systems, with multiple awards including Trane and TONFY in China, ties the business to long duration demand for energy efficiency and battery infrastructure, which could support both top line performance and margin outcomes as volumes scale."
Q3 results show that thesis starting to appear in the reported figures. Industrial and commercial vehicle net sales rose 23% year on year, helping lift adjusted EBIT margin to 16.3%. The Multistack data center award and upgraded industrial revenue outlook for 2027 are specific developments that align with that longer duration, higher mix ambition.
Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there.
Evaluating Garrett Motion’s Bear Case On New Programs
Bears worry Garrett Motion’s new cooling platforms never get past pilot projects into real scale.
"Adoption of oil free and battery energy storage cooling compressors depends on large HVAC and battery customers converting interest and early awards into broad deployment. Any slower rollout or constrained capital spending at these customers could restrict growth in industrial sales and pressure margins on the new product lines."
Q3 brings one clear proof point with the Multistack data center award and a higher 2027 industrial outlook. Even so, industrial net sales of US$230 million guided for 2026 and the 2027 ramp are still modest versus group sales, so execution risk around broad deployment remains very real.
Hunt For Quiet Dislocations
Garrett Motion shows that earnings momentum and share price can move out of sync. The real opportunity is in stocks that could be undervalued before expectations reset.
- Company 1 - 46% below our estimate - turns a near record construction backlog and major infrastructure projects into a higher value work mix.
- Company 2 - 27% below our estimate - supplies grid testing equipment and aerospace components as utilities and defense programs upgrade critical electrical systems.
- Company 3 - 38% below our estimate - expands protective film manufacturing and installation capacity to meet higher margin auto and architectural coating demand.
That is three of the list. See every one of the 29 undervalued companies on it →
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