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REV Group (REVG) Moves 11.5% Higher: Will This Strength Last?

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REV Group (REVG - Free Report) shares soared 11.5% in the last trading session to close at $20.11. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 0.8% loss over the past four weeks.

The uptick followed the announcement of strategic actions by the company to drive growth. Additionally, the company also announced a special dividend of $3 per share. As part of the strategic actions, REVG closed the sale of its school bus business, Collins Bus Corporation, to Forest River Bus for $303 million in cash. REVG intends to exit the transit bus manufacturing by shutting down operations at its ElDorado National-California (ENC) business. The winding down of the ENC business is expected to be completed by the end of the fiscal year 2024. From the the first quarter fiscal 2024, REVG will have two reporting segments. REVG aims to generate at least $250 million in net cash proceeds from these strategic actions. The company aims to utilize this to return around $180 million to shareholders in the form of a special cash dividend of $3 per share. The special dividend is payable on Feb 16, 2024, to shareholders of record as of Feb 9. The company plans to use the remaining proceeds to pay down debt under its ABL credit facility

This company is expected to post quarterly earnings of $0.09 per share in its upcoming report, which represents a year-over-year change of -25%. Revenues are expected to be $577.08 million, down 1.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For REV Group, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on REVG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

REV Group is part of the Zacks Transportation - Services industry. Global Business Travel Group, Inc. (GBTG - Free Report) , another stock in the same industry, closed the last trading session 5.2% higher at $6.05. GBTG has returned -10.9% in the past month.

For Global Business Travel Group, Inc., the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.06. This represents a change of +53.9% from what the company reported a year ago. Global Business Travel Group, Inc. currently has a Zacks Rank of #3 (Hold).

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