Speciality vehicle provider REV (NYSE: REVG) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 11.3% year on year to $644.9 million. The company’s full-year revenue guidance of $2.43 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $0.79 per share was 24.7% above analysts’ consensus estimates.

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“We are pleased with our continued momentum this quarter, highlighted by robust growth in shipments and earnings across the Specialty Vehicles segment. Third quarter performance reflects the continued improvement of our manufacturing capabilities, the strength of our customer relationships, and operational resilience in a dynamic market,” REV Group Inc. President and CEO, Mark Skonieczny, said.

Company Overview

Offering the first full-electric North American fire truck, REV (NYSE: REVG) manufactures and sells specialty vehicles.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, REV Group struggled to consistently increase demand as its $2.40 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. REV Group’s recent performance shows its demand remained suppressed as its revenue has declined by 3.4% annually over the last two years. 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.

This quarter, REV Group reported year-on-year revenue growth of 11.3%, and its $644.9 million of revenue exceeded Wall Street’s estimates by 5%.

Looking ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.

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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 3.5% 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 4.1 percentage points over the last five years.

In Q2, REV Group generated an operating margin profit margin of 8.8%, up 3.9 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

REV Group’s EPS grew at an astounding 161% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.

We can take a deeper look into REV Group’s earnings to better understand the drivers of its performance. As we mentioned earlier, REV Group’s operating margin expanded by 4.1 percentage points over the last five years. On top of that, its share count shrank by 22.1%. 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 shorter period to see if we are missing a change in the business.

For REV Group, its two-year annual EPS growth of 47.7% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, REV Group reported adjusted EPS of $0.79, up from $0.48 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects REV Group’s full-year EPS of $2.40 to grow 31.1%.

Key Takeaways from REV Group’s Q2 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. Looking ahead, EBITDA guidance exceeded expectations. Zooming out, we think this was a very good print with some key areas of upside. The stock traded up 12.8% to $58.42 immediately following the results.

REV Group may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.