REV Group Inc (NYSE:REVG) Identified as a Peter Lynch-Style Investment

REV Group Inc (NYSE:REVG) has been identified by a screening process built on Peter Lynch's investment philosophy, which highlights finding companies with maintainable growth paths trading at sensible prices. This method, explained in Lynch's book One Up on Wall Street, centers on fundamental analysis instead of market timing, looking for businesses with sound financial condition, steady earnings increases, and acceptable debt amounts. The process aims for companies increasing at a speed that can be upheld over the long run, steering clear of those with sharp but possibly fleeting growth rates.

Meeting Peter Lynch Criteria

REV Group displays a number of traits that match Lynch's investment rules. The company's financial numbers meet important screening conditions intended to find good growth at fair prices:

• Maintainable Earnings Growth: REV Group's earnings per share have increased at an average yearly rate of 29.36% over the last five years. This is inside Lynch's favored span of 15% to 30%, pointing to solid but not excessive growth that is more probable to be maintained.
• Appealing Price Compared to Growth: The company's PEG ratio, which measures its Price-to-Earnings ratio against its growth rate, is 0.73. A PEG ratio under 1.0 is a fundamental part of the Lynch method, indicating that the stock could be priced low considering its earnings growth possibility.
• High Profitability: With a Return on Equity of 27.89%, REV Group greatly passes the screen's minimum condition of 15%. A strong ROE shows that management is using shareholder equity effectively to produce earnings, a main sign of company quality.
• Good Financial Condition: The company keeps a Debt-to-Equity ratio of 0.23, which is both under the screen's limit of 0.6 and matches Lynch's stricter liking for a ratio under 0.25. This indicates a careful capital structure with limited financial danger. Its Current Ratio of 1.63 also verifies it has enough short-term assets to meet its upcoming obligations.

Fundamental Analysis Overview

A detailed fundamental analysis of REV Group gives it an overall score of 6 out of 10, placing it well inside the machinery industry. The company's profile is marked by a good mix of profitability and financial condition. Its outstanding Return on Equity and Return on Invested Capital do better than most of its industry competitors. While its price based on the typical P/E ratio seems acceptable, it becomes more interesting when growth is included, as shown by the low PEG ratio. The analysis also mentions good directions, including a quickening earnings growth rate and a decrease in shares available, which can improve per-share value as time passes.

Alignment with GARP Investing

For investors looking for Growth at a Reasonable Price (GARP), REV Group offers a strong case. The GARP method, similar to Lynch's way, tries to bypass the limits of paying too much for fast-rising growth stocks or accepting unmoving value choices. REV Group fits this model by showing a clear and definite growth path in earnings, paired with a price that does not seem too high. The company's focus on making specialty and recreational vehicles, a fairly clear business area, also fits with Lynch's rule of investing in what you understand. Its fair price measures, like the PEG ratio, give a buffer, while its high profitability and clear balance sheet indicate the quality needed for long-term growth.

Investors curious about reviewing other companies that pass the Peter Lynch screen can locate the full and current list of outcomes here.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The opinions expressed are based on current data and analysis, which are subject to change. All investments involve risk, including the possible loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.