S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
Best Buy reports lower 4Q sales and profits as shoppers remain cautious
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
From Hometown Hero to Franchise Partner — 3 Celebrities Collaborating With Their Hometown Brands
S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
Best Buy reports lower 4Q sales and profits as shoppers remain cautious
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
From Hometown Hero to Franchise Partner — 3 Celebrities Collaborating With Their Hometown Brands
S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
Best Buy reports lower 4Q sales and profits as shoppers remain cautious
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
From Hometown Hero to Franchise Partner — 3 Celebrities Collaborating With Their Hometown Brands
S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
Best Buy reports lower 4Q sales and profits as shoppers remain cautious
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
Hunting for Domestic Vanadium - The U.S. Govt. Did WHAT? (Ad)
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
From Hometown Hero to Franchise Partner — 3 Celebrities Collaborating With Their Hometown Brands

REV Group is a speculative buy for 2024

Rev Group Stock

Key Points

  • REV Group had a solid Q4 and guided the market higher.
  • Strengths in the F&E and commercial segments offset weaknesses in the recreational sector.
  • RVIA data suggests recreational sales will return to growth in 2024, and there is a healthy dividend to help bide the time. 
  • 5 stocks we like better than REV Group

REV Group NYSE: REVG struggled to retain and regain traction over the last two years as supply chain hurdles and industry normalization in the RV market took a toll on production and deliveries. However, the company leaned hard into the supply chain and operating improvements that began to take hold earlier this year and have this transportation company firing on all cylinders now. 

While weakness persists in the RV market, it is normalizing and expected to return to growth over the next year. Until then, strength in the Fire & Emergency and Commercial segments will sustain above-consensus growth. And REV Group pays a healthy little dividend to help mitigate risks. 

REV Group: a double-beat and rosy guidance lift share prices

REV Group had a solid, bordering on robust quarter with revenue of $693.3 million, growing 11.2% YOY and outpacing the consensus by 400 basis points. The strength is due primarily to the Fire & Emergency segment, which grew by 34%, aided by supply chain improvement, manufacturing efficiency, and increased delivery and mix. The Commercial segment was also solid, with a gain of 25% driven by mixed internal results, while the Recreational segment contracted by 17%. 

Margin news is more impressive. The combination of operating improvement, cost control and leverage drove wider margins, improved cash flow and free cash flow. Moving down the statement, operating income grew by 2.5X, net income by 3.4X, GAAP earnings by more than 300% and adjusted earnings by 80%. More importantly, the adjusted earnings topped the consensus by 5500 basis points to outpace the top-line strength significantly, and margin strength is expected to persist next year.

The guidance is good and potentially cautious, given the momentum displayed in Q4 2023. The company expects revenue to be flat to up low-single-digits with a double-digit improvement in margin. The adjusted EBITDA is forecast to grow more than 12% and may benefit from unexpected leverage. Segmentally, the backlog in F&E is up 40% to a record level and compounded by an expectation the Recreation segment will return to growth. The latest data from the RVIA suggests RV wholesale deliveries will increase by 14%, indicating demand for REVG platforms.  


REV Group strengthens a strong balance sheet

REV Group improved more than its physical operations. The surge in revenue and improved cash flow allowed it to strengthen its already strong balance sheet. The company’s cash and assets are up compared to last year, net debt is low at $128.7 million, and the payments have ample coverage. The company’s leverage is incredibly low at 0.3X equity and 0.1X assets, leaving plenty of cash flow for reinvestment and the dividend. 

REV Group is not a high-yield issue, with a payment worth roughly 1.15% of the pre-release price action. However, the payout ratio, about 18%, and the growth outlook are attractive. The company has solid business and cash flow and should be able to increase the dividend over time.

The technical outlook: REVG is at a critical turning point

The price action in REVG began to trend higher mid-year and is now at a critical turning point. The 5% post-release pop has the market trading at a key resistance level and may continue higher. If the market breaks above this level, near $18, it will signal a complete reversal within a more extensive trading range. 

In that scenario, the market could increase to $20 and possibly set a multi-year high. Among the catalysts for such a move are the analysts. The analysts have yet to issue updates for 2024 but have been lifting their price targets and upgrading sentiment all year. As it is, the stock is rated at Hold (up from Reduce) with a target of $15.80 at the consensus. 

Rev Group stock chart

→ This is the #1 Stock to Buy for the AI Tidal Wave (From Chaikin Analytics) (Ad)

Should you invest $1,000 in REV Group right now?

Before you consider REV Group, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and REV Group wasn't on the list.

While REV Group currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Beginners Guide To Retirement Stocks Cover

Click the link below and we'll send you MarketBeat's list of seven best retirement stocks and why they should be in your portfolio.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
REV Group (REVG)
3.0379 of 5 stars
$20.64+1.8%0.97%27.16Hold$16.40
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


Featured Articles and Offers

Search Headlines: