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Speciality vehicle provider REV reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 11.1% year on year to $664.4 million. Its non-GAAP profit of $0.83 per share was 6.4% above analysts’ consensus estimates.

Is now the time to buy REV Group? Find out by accessing our full research report, it’s free for active Edge members.

REV Group (REVG) Q3 CY2025 Highlights:

• Revenue: $664.4 million vs analyst estimates of $635.6 million (11.1% year-on-year growth, 4.5% beat)
• Adjusted EPS: $0.83 vs analyst estimates of $0.78 (6.4% beat)
• Adjusted EBITDA: $69.7 million vs analyst estimates of $62.2 million (10.5% margin, 12.1% beat)
• Operating Margin: 7.1%, up from 5.8% in the same quarter last year
• Free Cash Flow Margin: 8.1%, down from 10.6% in the same quarter last year
• Backlog: $4.64 billion at quarter end, up 3.7% year on year
• Market Capitalization: $2.72 billion

Company Overview

Offering the first full-electric North American fire truck, REV manufactures and sells specialty vehicles.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, REV Group grew its sales at a sluggish 1.6% compounded annual growth rate. This was below our standards and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. REV Group’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.4% annually. REV Group isn’t alone in its struggles as the Heavy Transportation Equipment industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. REV Group’s backlog reached $4.64 billion in the latest quarter and averaged 3.7% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for REV Group’s products and services but raises concerns about capacity constraints.

This quarter, REV Group reported year-on-year revenue growth of 11.1%, and its $664.4 million of revenue exceeded Wall Street’s estimates by 4.5%.

Looking ahead, sell-side analysts expect revenue to grow 6.5% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.

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Operating Margin

REV Group was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.9% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, REV Group’s operating margin rose by 3.9 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, REV Group generated an operating margin profit margin of 7.1%, up 1.4 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

REV Group’s EPS grew at an astounding 76.2% compounded annual growth rate over the last five years, higher than its 1.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

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We can take a deeper look into REV Group’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, REV Group’s operating margin expanded by 3.9 percentage points over the last five years. On top of that, its share count shrank by 21.9%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For REV Group, its two-year annual EPS growth of 41.9% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, REV Group reported adjusted EPS of $0.83, up from $0.51 in the same quarter last year. This print beat analysts’ estimates by 6.4%. Over the next 12 months, Wall Street expects REV Group’s full-year EPS of $2.72 to grow 29.3%.

Key Takeaways from REV Group’s Q3 Results

We were impressed by how significantly REV Group blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $56.04 immediately following the results.

Sure, REV Group had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.