Breaking Down REV Group, Inc. (REVG) Financial Health: Key Insights for Investors

You're looking at REV Group, Inc. (REVG) and seeing a specialty vehicle manufacturer that just crushed its third-quarter earnings, but you're defintely wondering if the momentum can hold into 2026. The company's latest numbers show a clear acceleration in their core business, with consolidated net sales hitting $644.9 million in Q3 2025, and Adjusted EBITDA rising to a strong $64.1 million for the quarter. Honestly, the big story is the Specialty Vehicles segment's massive backlog, which stood at $4,275.5 million at the end of Q3, securing years of revenue in fire apparatus and ambulance units. But here's the quick math: while management raised its full-year fiscal 2025 outlook to net sales of $2.4 to $2.45 billion and net income of $95 to $108 million, you still have to weigh the mixed signals from the Recreational Vehicles segment, where some categories saw lower order intake. Wall Street's consensus price target sits around $51.50, a moderate buy rating, which tells you analysts are cautiously optimistic, but not throwing a party yet. Let's dig into the balance sheet and segment performance to map out where the real value-and the hidden risks-lie in the near term.

Revenue Analysis

You need to know where the growth is coming from, and for REV Group, Inc. (REVG), the story is definitively in specialty vehicles. The company has successfully streamlined its focus, projecting a consolidated net sales range of $2.4 billion to $2.45 billion for the full fiscal year 2025. That guidance, raised after strong Q3 performance, implies a solid 10% increase in revenue over the 2024 pro forma net sales, showing that operational improvements are hitting the top line.

The primary revenue streams for REV Group, Inc. (REVG) are split across two core segments: the high-demand Specialty Vehicles and the more cyclical Recreational Vehicles (RV). The shift in strategy is clear-they are doubling down on their core strengths in public service and commercial vehicles. Honestly, this focus is key to their improved margin profile.

Here's the quick math on the expected full-year segment contributions based on the midpoint of the updated 2025 guidance:

The Specialty Vehicles segment is the powerhouse, with Q3 2025 net sales hitting $483.3 million, an 11.8% increase year-over-year. This growth is fueled by strong demand for fire apparatus and ambulances, with unit shipments for fire apparatus increasing 11% and ambulance units up 7% in the third quarter alone. This segment's full-year revenue growth is expected to be in the mid-teens over the 2024 pro forma base of $1.56 billion. Their massive $4.3 billion backlog here gives us great visibility into future quarters.

The Recreational Vehicles segment, while smaller, is still important. It posted Q3 2025 net sales of $161.7 million, a 9.7% increase year-over-year. However, the segment is navigating some headwinds, specifically from tariff impacts on luxury vans and the need for increased dealer assistance, which is pressuring profitability. The company is addressing this by streamlining the portfolio, including the completed sale of the Lance Camper business, to focus on motorized RVs.

The most significant change in revenue structure is the strategic divestiture of the Bus Manufacturing Businesses, which was completed in the prior year. This move, along with the Lance Camper sale, allows management to focus capital and operational excellence on the higher-margin, more predictable Specialty Vehicles segment, which is defintely a smart move for long-term value creation. You can read more about their strategic direction here: Mission Statement, Vision, & Core Values of REV Group, Inc. (REVG).

• Specialty Vehicles are the core growth driver.
• Fire and ambulance demand is robust.
• RV segment is being streamlined for focus.

Profitability Metrics

You're looking for a clear picture of how much money REV Group, Inc. (REVG) actually keeps from its sales, and honestly, the story is one of strategic focus paying off in the core business, even with some headwinds elsewhere. The key takeaway is that their operational reset has led to solid margin expansion in their Specialty Vehicles segment, which is now the primary driver of profitability.

For the trailing twelve months (LTM) leading up to the most recent data, REV Group, Inc. reported a gross profit of approximately $346.00 million on revenue of roughly $2.40 billion. This translates to a Gross Margin of 14.43%. Drilling down the income statement, the Operating Margin (earnings before interest and taxes, or EBIT) stands at 7.19%, with a Net Profit Margin of 4.51%. Here's the quick math on their LTM performance:

• Gross Profit Margin: 14.43%
• Operating Profit Margin: 7.19%
• Net Profit Margin: 4.51%

The company's updated full-year fiscal 2025 guidance projects Net Income between $95 million and $108 million on Net Sales of $2.4 billion to $2.45 billion. This guidance suggests a continued Net Profit Margin around the current LTM figure, or slightly higher at the midpoint of the range.

Trends in Operational Efficiency and Margins

The trend in profitability is defintely a tale of two segments. The overall margin improvement is largely due to the strategic divestiture of lower-margin businesses and a sharp focus on operational efficiency in the remaining core segments. The Specialty Vehicles segment, which includes fire apparatus and ambulances-products with inelastic demand-has been a major success story.

For example, the Specialty Vehicles segment's Adjusted EBITDA margin expanded by 310 basis points to 13.4% in the third quarter of fiscal 2025. This is a direct result of increased shipments, price realization, and strong cost management offsetting inflationary pressures.

But still, you need to watch the Recreational Vehicles segment. In the third quarter of 2025, its Adjusted EBITDA margin contracted to 5.0%, down from 6.4% in the prior year quarter. This decline was driven by external factors like tariffs on imported luxury van chassis and increased dealer assistance costs. These external pressures can pop up unexpectedly. You can learn more about the market dynamics in Exploring REV Group, Inc. (REVG) Investor Profile: Who's Buying and Why?

Industry Comparison: A Reality Check

To put REV Group, Inc.'s margins into perspective, we compare them to the broader auto manufacturing industry. The company's Gross Margin of 14.43% falls squarely within the typical range for Original Equipment Manufacturers (OEMs), which generally average 10% to 15%. This suggests a competitive cost structure for a specialty vehicle manufacturer.

However, the Net Profit Margin of 4.51% is notably below the general auto industry's average net profit margin, which was around 7.3% as of August 2024. This gap highlights the higher operating expenses (selling, general, and administrative costs) or interest/tax burden relative to peers, or simply the lower-volume, specialized nature of their business compared to mass-market auto manufacturers.

The real story here is the successful margin expansion in the Specialty Vehicles segment, which is the key to closing that net margin gap over time. The company's strategic focus is on converting its substantial backlog into consistent, high-margin revenue.

Debt vs. Equity Structure

You want to know how REV Group, Inc. (REVG) is funding its operations and growth, and the short answer is: they are leaning heavily on shareholder equity, which is a sign of financial stability. As of the third quarter of fiscal year 2025, the company's debt levels are quite manageable, especially when compared to their capital base. It's a conservative, deliberate approach.

The company's total debt is minimal relative to its size, standing at just $90.0 million as of July 31, 2025. This figure is entirely comprised of long-term debt, as there is no significant short-term debt component listed on the balance sheet beyond minor short-term lease obligations. This low debt load is a strategic move, reflecting management's focus on maintaining a clean balance sheet. Here's the quick math on their liquidity: after accounting for the $36.0 million in cash on hand, their net debt sits at a very low $54.0 million. That's a defintely healthy position.

The core metric for assessing financial leverage (how much debt a company uses to finance its assets) is the debt-to-equity (D/E) ratio. For REV Group, Inc., this ratio is exceptionally low, registering at just 0.23 as of July 31, 2025. To be fair, the industry average for Specialty Vehicle Manufacturing often runs higher, typically closer to 0.50 to 0.60, which means REV Group, Inc. is using significantly less debt than many of its peers. This low ratio suggests a strong buffer against economic downturns or unexpected capital needs.

The company has also been proactive in managing its debt facilities. In February 2025, REV Group, Inc. amended its Asset-Based Lending (ABL) revolving credit facility, which is a key source of flexible, near-term funding. This move was less about raising new debt and more about optimization:

• Extended the maturity date of the facility.
• Decreased the total commitment from $550 million to $450 million.
• Maintained significant liquidity, with $247.2 million available under the ABL as of July 31, 2025.

This balance of debt and equity shows a clear capital allocation strategy: use a small amount of low-cost, flexible debt while prioritizing the return of capital to shareholders. The company has been actively repurchasing its own stock, buying back approximately 2.9 million common shares for $88.4 million during the second quarter of 2025. They also continue to pay a regular quarterly cash dividend of $0.06 per share. This signals a preference for equity funding and a confidence in the company's strong cash flow generation, which you can read more about in our full analysis: Breaking Down REV Group, Inc. (REVG) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking for a clear picture of REV Group, Inc. (REVG)'s ability to meet its near-term obligations, and the data from the fiscal 2025 third quarter (Q3 2025) suggests the company is in a solid, but not overly liquid, position. Their focus on operational efficiency is translating into stronger cash generation, which is the defintely the right trend to watch.

The company's short-term liquidity, measured by its current and quick ratios, shows a stable capacity to cover liabilities. Here's the quick math on their liquidity positions as of July 31, 2025:

• The Current Ratio sits at approximately 1.63. This means REV Group, Inc. has $1.63 in current assets for every dollar of current liabilities, which is a healthy buffer for a manufacturing business.
• The more stringent Quick Ratio (or acid-test ratio), which strips out inventory, is lower at about 0.53. This is common for a manufacturer like REV Group, Inc. with significant inventory, but it tells you that without selling stock, their immediate cash and receivables cover only about half of their short-term debts.

The good news is the overall trend in their working capital is positive for cash flow. Trade working capital was $191.6 million as of July 31, 2025, which is a significant decrease of $56.6 million from the end of fiscal 2024. This reduction wasn't from a fire sale; it was driven by smart management, specifically lower inventory balances and increased customer advances, which is a great sign of operating leverage. Less cash tied up in inventory and more cash collected upfront is a powerful combination.

When you look at the cash flow statement, the story gets even better. Strong operating performance is fueling their balance sheet. For the first nine months of fiscal 2025, cash from operating activities was $164.7 million. This is a strong year-to-date figure, with $60.3 million generated in Q3 2025 alone. The company is forecasting a full-year net cash provided by operating activities in the range of $190 million to $195 million. This robust operating cash flow is what gives them financial flexibility.

On the investing and financing side, the trends are also constructive. The company's full-year capital expenditure guidance is moderate at $45.0 million to $50.0 million, which is mostly focused on organic growth investments like the Spartan Emergency Response facility expansion. This controlled spending, combined with high operating cash, leads to a strong Free Cash Flow (FCF) guidance of $140 million to $150 million for the full fiscal year 2025. Plus, they are carrying a low net debt position of only $54.0 million as of July 31, 2025, with $36.0 million in cash on hand. This low leverage and strong FCF generation mitigates any potential liquidity concerns from the lower quick ratio. The balance sheet is healthy. For a deeper dive into the company's strategic position, check out the full post: Breaking Down REV Group, Inc. (REVG) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if REV Group, Inc. (REVG) is a buy, a hold, or a sell right now. The quick takeaway is that while the stock has seen massive appreciation, its valuation multiples suggest it's trading at a premium to its historical average, but analysts are split, leaning toward a Moderate Buy or Hold.

We need to look past the headline stock price and check the core valuation ratios (multiples) to see what you're defintely paying for. As of late 2025, REV Group, Inc. (REVG) trades at a trailing price-to-earnings (P/E) ratio of approximately 24.0x. Here's the quick math: that's based on a recent stock price of around $51.16 and trailing earnings per share (EPS) of $2.12.

That 24.0x P/E is higher than the company's historical average, but the forward P/E, which uses expected earnings, drops to around 19.1x. This drop suggests the market is pricing in significant earnings growth for the fiscal year 2025, a crucial point for investors betting on continued operational improvement.

• Price-to-Book (P/B): At roughly 6.6x, this is quite high, indicating the market values the company significantly above its net asset value (book value).
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric, which is useful for comparing capital-intensive industrial companies, sits around 13.3x. This multiple is higher than some peers in the industrial sector, suggesting a premium for their recent performance and market position in specialty vehicles.

The stock has had a phenomenal run. Over the last 12 months, REV Group, Inc. (REVG)'s stock price has surged by over +72.73%, moving from a 52-week low of $26.51 to a high of $64.47. This massive gain reflects the market's positive reaction to strong earnings beats and increased revenue guidance. A stock doubling in a year is a strong signal of momentum.

When you look at shareholder returns beyond capital gains, the dividend profile is modest. REV Group, Inc. (REVG) offers an annual dividend of $0.24 per share, which translates to a current dividend yield of about 0.5%. The payout ratio-the percentage of earnings paid out as dividends-is low, at roughly 11.3%. This low payout ratio is generally a good sign, as it means the company is retaining most of its earnings to reinvest in the business or pay down debt, rather than distributing it to shareholders. It's not a stock you buy for income, but for growth.

Analyst sentiment is mixed but generally positive, which is a common signal of a stock that has run up fast. The consensus rating from brokerages is a Moderate Buy or Hold. The average 12-month price target is around $51.50, which is right in line with the current trading price. What this estimate hides is the range: some analysts have targets as high as $64.00, while others are lower, which shows a real debate about the company's future growth trajectory. You need to decide if you believe the growth is sustainable enough to justify the current premium. For a deeper dive into the company's operational strengths and weaknesses, you should check out the full post at Breaking Down REV Group, Inc. (REVG) Financial Health: Key Insights for Investors.

Your next step should be to look closely at the company's backlog and margin trends for the next two quarters to see if the expected earnings growth that drives that lower forward P/E is truly achievable.

Risk Factors

You're looking at REV Group, Inc. (REVG) and seeing a strong Specialty Vehicles segment, which is great, but a seasoned analyst knows you must map the headwinds. The core risks for REVG in fiscal year 2025 are less about catastrophic failure and more about execution, plus navigating persistent external pressures, particularly in the Recreational Vehicles (RV) segment.

The biggest near-term financial drag is the external tariff risk. Specifically, the company anticipates a tariff-related headwind of $5 million to $7 million in the fourth quarter of fiscal year 2025, primarily impacting the RV segment's luxury van imports. This is a direct hit to profitability, and while it's a known quantity, it still contracts margins. To be fair, the company is actively working to offset this with pricing actions and operational efficiency improvements, but tariffs are a clear, defintely measurable risk.

Operationally, the focus on the high-margin Specialty Vehicles segment-fire apparatus and ambulances-is a strategic strength, but it introduces a different kind of risk: conversion and throughput. The segment's backlog is massive, standing at over $4.2 billion at the end of the third quarter of 2025. The risk isn't a lack of demand; it's the failure to convert that backlog into revenue fast enough. If supply chain issues or labor constraints slow down production, that huge backlog becomes a liability, not an asset, because it ties up working capital.

Here's the quick math on the segment risk:

• Specialty Vehicles (F&E): Backlog of $4,275.5 million (Q3 2025). This segment is the growth engine.
• Recreational Vehicles (RV): Backlog decreased to $224.3 million (Q3 2025), a $16.0 million drop year-over-year.

The RV segment remains a structural concern. While Specialty Vehicles' Adjusted EBITDA was $64.6 million in Q3 2025, RV segment Adjusted EBITDA was only $8.1 million, a decrease of 13.8% from the prior year quarter. This decline was due to tariffs and increased dealer assistance, signaling a softer market and pricing pressure. The segment's lower-than-expected performance could dilute the overall strength of the company, even with the full-year Adjusted EBITDA guidance raised to $220 million to $230 million.

The company's strategic response is clear: they are doubling down on what works and shedding non-core assets. The completed sale of Lance Camper and the focus on core motorized RVs is a smart move to mitigate the volatility of the broader RV market. Plus, the investment of $20 million to expand the Spartan Emergency Response facility to boost fire apparatus capacity by 40% is a concrete action to address the throughput risk in their most profitable business line. You can read more about the strategic drivers behind the company's investor base in Exploring REV Group, Inc. (REVG) Investor Profile: Who's Buying and Why?

The financial leverage is manageable, with net debt at $54.0 million as of July 31, 2025, which gives them flexibility. Still, the core action for management is to execute on those operational improvements and ensure the Specialty Vehicles segment converts that massive backlog into the projected full-year net sales of up to $2.45 billion.

Growth Opportunities

You want to know where REV Group, Inc. (REVG) is heading, and the clear takeaway is that their strategic pivot to focus on essential public service vehicles is paying off, driving a significant increase in their 2025 financial outlook. The core growth engine is the Specialty Vehicles segment, which includes fire trucks and ambulances, backed by a massive order backlog.

The company raised its full-year fiscal 2025 consolidated revenue guidance to a range of $2.4 billion to $2.45 billion, a strong signal of confidence. Here's the quick math: this midpoint reflects about a 10% increase over 2024 pro forma net sales. Also, the expected earnings per share (EPS) for the next year is projected to grow by 34.91%, increasing from $2.12 to $2.86 per share.

Key Growth Drivers and Strategic Focus

The company's growth is not just about market demand; it's about execution and strategic streamlining. The Specialty Vehicles segment is the powerhouse, with a backlog of approximately $4.3 billion as of the end of Q3 2025, which gives the company roughly two years of revenue visibility. This stability is a huge competitive advantage (moat) in a cyclical industry.

This focus is clear in their recent performance and actions:

• Specialty Vehicle Momentum: Q3 2025 saw fire unit shipments increase 11% and ambulance unit shipments rise 7% compared to the prior year.
• Capacity Expansion: REV Group is investing in production capacity to convert that backlog into sales. They broke ground on a $20 million expansion at the Spartan Emergency Response facility, which will boost fire apparatus production capacity by 40%. A further $2.6 million investment was announced in November 2025 to expand capacity at Horton Emergency Vehicles.
• Portfolio Streamlining: The sale of the non-motorized Lance Camper business in Q3 2025, following the divestiture of the bus businesses, simplifies the portfolio. This allows management to defintely concentrate capital and operational resources on the higher-margin, essential-use vehicles.

This operational focus is translating directly to the bottom line, with the full-year fiscal 2025 Adjusted EBITDA guidance raised to a range of $220 million to $230 million. This is a significant jump, reflecting improved manufacturing throughput and price realization.

Product Innovation and Competitive Edge

Product innovation, particularly in the ambulance segment, is a quiet but critical driver. For example, the REV Ambulance Group brands showcased new models at EMS World 2025, including the Road Rescue UltraMedic Type 3 ambulance, featuring an ER-inspired interior, and a new electrical system, Power-Tech by Horton™. These innovations reinforce their position as a premier provider of specialty vehicles. You can dive deeper into the market perception and institutional interest in Exploring REV Group, Inc. (REVG) Investor Profile: Who's Buying and Why?

The company's competitive advantage centers on its deep relationships with municipal and commercial emergency departments, which are sticky customers with long replacement cycles. The sheer size of the Specialty Vehicles backlog-$4.3 billion-is a powerful barrier to entry for competitors. While the Recreational Vehicles segment still faces soft industry demand, the overall strategy is to use the strong, inelastic demand for fire and ambulance units to fund growth and manage the more discretionary side of the business.

Here is a snapshot of the updated full-year fiscal 2025 guidance:

What this estimate hides is the ongoing tariff headwind in the RV segment, which is expected to be around $5 million to $7 million in the fourth quarter, but the strength in Specialty Vehicles is more than offsetting this pressure.