REV Group (REVG): Valuation Check After Short Interest Drops and the Stock Rallies

REV Group (REVG) just caught traders attention after a sharp drop in short interest. This shift helped push the stock higher as bearish positions were reduced and some investors moved to cover.

See our latest analysis for REV Group.

That short-covering pop comes on top of a powerful backdrop, with a year to date share price return of 77.1 percent and a five year total shareholder return of 625.08 percent. This suggests momentum is still very much on the front foot.

If this kind of rerating has you curious about what else is out there, it could be a good moment to explore fast growing stocks with high insider ownership for other high potential names.

With earnings growing, a premium valuation versus intrinsic estimates, and only a modest gap to Wall Street targets, investors now face a key question: is REV Group still mispriced or is the market already baking in future growth?

Most Popular Narrative: 6.3% Undervalued

Compared with REV Group's last close at $56.39, the most followed narrative sees fair value modestly higher, suggesting the current rally still has room.

A strategically large, multi-year backlog in the fire and ambulance divisions provides earnings protection while allowing pricing actions and favorable product mix to be realized over time, buffering against near-term economic uncertainty and driving steady earnings and margin expansion.

Read the complete narrative.

Want to see how a steady revenue build, rising margins, and a leaner portfolio combine into that value gap? The full narrative explains the calculations that support this view.

Result: Fair Value of $60.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, elevated deal risk around the Terex merger and persistent inflationary cost pressures could squeeze margins and weaken the case for further upside.

Find out about the key risks to this REV Group narrative.

Another Take on Value

While the consensus narrative sees REV Group about 6 percent undervalued, our DCF model paints a cooler picture, with fair value closer to $42.77. This implies the shares look overvalued today. Which lens makes more sense if earnings or merger assumptions do not fully play out?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own REV Group Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in minutes, starting with Do it your way.

A great starting point for your REV Group research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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