Critical Review: REV Group (NYSE:REVG) versus RXO (NYSE:RXO)

RXO (NYSE:RXO) and REV Group (NYSE:REVG) are both mid-cap transportation companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

92.7% of RXO shares are held by institutional investors. 2.8% of RXO shares are held by company insiders. Comparatively, 1.7% of REV Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares RXO and REV Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RXO	-1.25%	0.88%	0.43%
REV Group	3.86%	31.67%	10.30%

Risk & Volatility

RXO has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500. Comparatively, REV Group has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for RXO and REV Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RXO	4	11	4	0	2.00
REV Group	1	3	1	1	2.33

RXO currently has a consensus price target of $16.14, indicating a potential upside of 10.64%. REV Group has a consensus price target of $49.25, indicating a potential downside of 22.93%. Given RXO’s higher possible upside, equities research analysts clearly believe RXO is more favorable than REV Group.

Earnings and Valuation

This table compares RXO and REV Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RXO	$4.55 billion	0.53	-$290.00 million	($0.43)	-33.93
REV Group	$2.46 billion	1.27	$95.20 million	$1.91	33.46

REV Group has lower revenue, but higher earnings than RXO. RXO is trading at a lower price-to-earnings ratio than REV Group, indicating that it is currently the more affordable of the two stocks.

Summary

REV Group beats RXO on 9 of the 15 factors compared between the two stocks.

About RXO

RXO, Inc. provides full truckload freight transportation brokering services. It also offers brokered services for managed transportation, last mile, and freight forwarding. The company was incorporated in 2022 and is based in Charlotte, North Carolina.

About REV Group

REV Group, Inc., together with its subsidiaries, designs, manufactures, and distributes specialty vehicles, and related aftermarket parts and services in the United States, Canada, and internationally. It operates through three segments: Fire & Emergency, Commercial, and Recreation. The Fire & Emergency segment provides fire apparatus equipment under the Emergency One, Kovatch Mobile Equipment, Ferrara, Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brand names; and ambulances under the American Emergency Vehicles, Horton Emergency Vehicles, Leader Emergency Vehicles, Road Rescue, and Wheeled Coach brand names. The Commercial segment offers transit buses, type A school buses, sweepers, and terminal trucks under the Collins Bus, Eldorado National (California), Magellan, Capacity, and LayMor brand names. The Recreation segment offers motorized and towable RV models under the American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs, and Lance Camper brands; and produces a range of custom molded fiberglass products. The company sells its products to municipalities, government agencies, private contractors, consumers, and industrial and commercial end users through its direct sales force or dealer network. The company was formerly known as Allied Specialty Vehicles, Inc. and changed its name to REV Group, Inc. in November 2015. REV Group, Inc. was incorporated in 2008 and is based in Brookfield, Wisconsin.