REV Group, Inc. (NYSE:REVG) shares have continued their recent momentum with a 26% gain in the last month alone. The last month tops off a massive increase of 138% in the last year.
After such a large jump in price, REV Group may be sending bearish signals at the moment with its price-to-earnings (or “P/E”) ratio of 28.3x, since almost half of all companies in the United States have P/E ratios under 18x and even P/E’s lower than 11x are not unusual. However, the P/E might be high for a reason and it requires further investigation to determine if it’s justified.
While the market has experienced earnings growth lately, REV Group’s earnings have gone into reverse gear, which is not great. It might be that many expect the dour earnings performance to recover substantially, which has kept the P/E from…
