Why Garret Motion Stock Triumphed on Thursday

Key Points

• Management's raised guidance for the entirety of 2025 didn't hurt, either.

• It increased its forecasts for both sales and headline net income.

• 10 stocks we like better than Garrett Motion ›

The stop lights were green for automotive technology company Garrett Motion (NASDAQ: GTX) on Thursday at least as far as its stock was concerned. Investors bid Garrett up by more than 3% that day, due mainly to its encouraging set of quarterly earnings figures. That rise was notably higher than that of the S&P 500 index, which crawled less than 0.1% higher.

An accelerating bottom line

Garrett's second-quarter results, published Thursday morning, featured rises in key metrics. The company's net sales didn't exactly boom, but they did increase almost 3% year over year to $913 million. Generally accepted accounting principles (GAAP) net income rose more strongly, advancing by nearly 36% to $87 million. On a non-GAAP (adjusted), per-share basis, the bottom line grew by 48% to $0.43.

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Although the consensus analyst estimate was $918 million, Garrett crushed the adjusted bottom-line pundit forecast of $0.42.

In the earnings release, Garrett attributed its improvements to broad gains in a number of cutting-edge product segments.

It quoted CEO Olivier Rabiller as saying the company "reinforced our leadership in turbocharging, by securing awards for more than $1 billion in light vehicle program extensions while continuing to advance our zero-emission technologies, achieving new milestones in our e-powertrain, e-cooling, and fuel cell programs."

Turbocharged guidance

Garrett clearly believes the positive momentum will continue, as it raised both its top-line and profitability guidance for the entirety of 2025. The company is now projecting that net sales will come in at $3.4 billion to $3.6 billion (previous guidance: $3.3 billion to $3.5 billion). GAAP net income should be $233 million to $278 million, up from the former estimate of $209 million to $254 million.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Garrett Motion. The Motley Fool has a disclosure policy.