What Happened?
Shares of speciality vehicle provider REV (NYSE: REVG) jumped 7.8% in the afternoon session after the company reported second-quarter results that beat analyst expectations and raised its full-year guidance.
The Wisconsin-based company announced second-quarter sales of $644.9 million, surpassing the consensus estimate of $614.4 million. Bolstering investor confidence further, REV Group lifted its financial forecast for the full year, raising its revenue guidance to a midpoint of $2.43 billion. Additionally, the company projected full-year adjusted EBITDA (a measure of profitability) of around $225 million, which was well above analyst estimates of $204.4 million. The strong quarterly performance and improved outlook suggest underlying business momentum, which was positively received by the market.
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What Is The Market Telling Us
REV Group’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 3.1% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
REV Group is up 75.1% since the beginning of the year, and at $55.75 per share, has set a new 52-week high. Investors who bought $1,000 worth of REV Group’s shares 5 years ago would now be looking at an investment worth $6,849.
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