Latest news with #CVGI
Yahoo
07-05-2025
- Automotive
- Yahoo
Commercial Vehicle Group (NASDAQ:CVGI) Beats Q1 Sales Targets, Stock Soars
Reviewing a company's long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Commercial Vehicle Group's demand was weak and its revenue declined by 2.8% per year. This wasn't a great result and is a sign of poor business quality. Formed from a partnership between two distinct companies, CVG (NASDAQ:CVGI) offers various components used in vehicles and systems used in warehouses. James Ray, President and Chief Executive Officer, said, 'Our first quarter results demonstrate sequential improvement in margins and free cash flow. Cash generation and debt paydown remain key priorities for CVG, as we look to build on our strong free cash performance in the first quarter through further margin improvement, working capital reduction, and reduced capital expenditures. We are beginning to see the benefits of efforts made in 2024, including strategic divestments of non-core businesses, to transform CVG. These divestitures, as well as our priority on improving operational efficiency, have allowed us to streamline operations, lower our cost structure, and drive cash generation to pay down debt. Despite industry-wide and global macroeconomic headwinds, we are prioritizing strong execution from the top down within CVG focused on cost mitigation, margin improvement, and operational efficiency.' Free Cash Flow was $11.21 million, up from -$7.42 million in the same quarter last year Operating Margin: 0.8%, down from 3.5% in the same quarter last year EBITDA guidance for the full year is $24.5 million at the midpoint, below analyst estimates of $25.2 million The company dropped its revenue guidance for the full year to $675 million at the midpoint from $690 million, a 2.2% decrease Is now the time to buy Commercial Vehicle Group? Find out in our full research report . Vehicle systems manufacturer Commercial Vehicle Group (NASDAQ:CVGI) announced better-than-expected revenue in Q1 CY2025, but sales fell by 26.8% year on year to $169.8 million. The company expects the full year's revenue to be around $675 million, close to analysts' estimates. Its non-GAAP loss of $0.08 per share was 44.8% above analysts' consensus estimates. Story Continues Commercial Vehicle Group Quarterly Revenue 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. Commercial Vehicle Group's recent performance shows its demand remained suppressed as its revenue has declined by 14.3% annually over the last two years. Commercial Vehicle Group Year-On-Year Revenue Growth This quarter, Commercial Vehicle Group's revenue fell by 26.8% year on year to $169.8 million but beat Wall Street's estimates by 3.8%. Looking ahead, sell-side analysts expect revenue to decline by 6.7% over the next 12 months. While this projection is better than its two-year trend, it's tough to feel optimistic about a company facing demand difficulties. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Operating Margin Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals. Commercial Vehicle Group was profitable over the last five years but held back by its large cost base. Its average operating margin of 2.9% was weak for an industrials business. This result isn't too surprising given its low gross margin as a starting point. Analyzing the trend in its profitability, Commercial Vehicle Group's operating margin decreased by 1.7 percentage points over the last five years. Commercial Vehicle Group's performance was poor no matter how you look at it - it shows that costs were rising and it couldn't pass them onto its customers. Commercial Vehicle Group Trailing 12-Month Operating Margin (GAAP) This quarter, Commercial Vehicle Group's breakeven margin was down 2.7 percentage points year on year. Since Commercial Vehicle Group's operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased. 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. Sadly for Commercial Vehicle Group, its EPS declined by 18.8% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand. Commercial Vehicle Group Trailing 12-Month EPS (Non-GAAP) Diving into the nuances of Commercial Vehicle Group's earnings can give us a better understanding of its performance. As we mentioned earlier, Commercial Vehicle Group's operating margin declined by 1.7 percentage points over the last five years. Its share count also grew by 9.4%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. Commercial Vehicle Group Diluted Shares Outstanding Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For Commercial Vehicle Group, its two-year annual EPS declines of 51.7% show it's continued to underperform. These results were bad no matter how you slice the data. In Q1, Commercial Vehicle Group reported EPS at negative $0.08, down from $0.13 in the same quarter last year. Despite falling year on year, this print easily cleared analysts' estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Commercial Vehicle Group's full-year EPS of negative $0.18 will reach break even. Key Takeaways from Commercial Vehicle Group's Q1 Results We were impressed by how significantly Commercial Vehicle Group blew past analysts' EPS and EBITDA expectations this quarter. We were also excited its revenue outperformed. On the other hand, it lowered its full-year revenue and EBITDA guidance. Overall, we think this was a mixed quarter. The stock traded up 7.1% to $0.95 immediately after reporting. Commercial Vehicle Group put up rock-solid earnings, but one quarter doesn't necessarily make the stock a buy. Let's see if this is a good investment. When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
Yahoo
09-04-2025
- Automotive
- Yahoo
Commercial Vehicle Group (CVGI): Buy, Sell, or Hold Post Q4 Earnings?
What a brutal six months it's been for Commercial Vehicle Group. The stock has dropped 68.8% and now trades at $0.95, rattling many shareholders. This might have investors contemplating their next move. Is there a buying opportunity in Commercial Vehicle Group, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it's free. Even though the stock has become cheaper, we're swiping left on Commercial Vehicle Group for now. Here are three reasons why you should be careful with CVGI and a stock we'd rather own. Formed from a partnership between two distinct companies, CVG (NASDAQ:CVGI) offers various components used in vehicles and systems used in warehouses. A company's long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Commercial Vehicle Group's demand was weak and its revenue declined by 2.4% per year. This was below our standards and is a sign of poor business quality. Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. As you can see below, Commercial Vehicle Group's margin dropped by 9.1 percentage points over the last five years. Almost any movement in the wrong direction is undesirable because of its already low cash conversion. If the trend continues, it could signal it's becoming a more capital-intensive business. Commercial Vehicle Group's free cash flow margin for the trailing 12 months was negative 5.3%. As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by. Commercial Vehicle Group burned through $42.59 million of cash over the last year, and its $166.3 million of debt exceeds the $26.63 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble. Unless the Commercial Vehicle Group's fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns. We remain cautious of Commercial Vehicle Group until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet. Commercial Vehicle Group falls short of our quality standards. Following the recent decline, the stock trades at 10.5× forward price-to-earnings (or $0.95 per share). This valuation multiple is fair, but we don't have much confidence in the company. There are better investments elsewhere. We'd suggest looking at one of Charlie Munger's all-time favorite businesses. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
