Commercial Vehicle Group (CVGI)

Vehicle systems manufacturer Commercial Vehicle Group (NASDAQ:CVGI) reported Q4 CY2025 results beating Wall Street’s revenue expectations, but sales fell by 5.2% year on year to $154.8 million. The company’s full-year revenue guidance of $680 million at the midpoint came in 7.1% above analysts’ estimates. Its non-GAAP loss of $0.18 per share was 20% below analysts’ consensus estimates.

Company Overview

Formed from a partnership between two distinct companies, CVG (NASDAQ:CVGI) offers various components used in vehicles and systems used in warehouses.

Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.

Competitors offering similar products include Dana (NYSE:DAN), Lear (NYSE:LEA), and Gentherm (NASDAQ:THRM).

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Commercial Vehicle Group struggled to consistently generate demand over the last five years as its sales dropped at a 2% annual rate. This was below our standards and is a sign of poor business quality.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Commercial Vehicle Group’s recent performance shows its demand remained suppressed as its revenue has declined by 14.9% annually over the last two years.

This quarter, Commercial Vehicle Group’s revenue fell by 5.2% year on year to $154.8 million but beat Wall Street’s estimates by 5.2%.

Looking ahead, sell-side analysts expect revenue to decline by 2.2% over the next 12 months. Although this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.

At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.

Commercial Vehicle Group has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 11.4% gross margin over the last five years. Said differently, Commercial Vehicle Group had to pay a chunky $88.62 to its suppliers for every $100 in revenue.

Commercial Vehicle Group’s gross profit margin came in at 9.7% this quarter , marking a 1.3 percentage point increase from 8.4% in the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Commercial Vehicle Group was profitable over the last five years but held back by its large cost base. Its average operating margin of 2.6% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Commercial Vehicle Group’s operating margin decreased by 4.7 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.

This quarter, Commercial Vehicle Group generated an operating margin profit margin of negative 1.2%, up 1.6 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

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.

Commercial Vehicle Group’s earnings losses deepened over the last five years as its EPS dropped 52.2% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Commercial Vehicle Group’s low margin of safety could leave its stock price susceptible to large downswings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Commercial Vehicle Group, its EPS declined by more than its revenue over the last two years, dropping 59.3%. This tells us the company struggled to adjust to shrinking demand.

We can take a deeper look into Commercial Vehicle Group’s earnings to better understand the drivers of its performance. We mentioned earlier that Commercial Vehicle Group’s operating margin expanded this quarter, but a two-year view shows its margin has declinedwhile its share count has grown 1.6%. This means the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q4, Commercial Vehicle Group reported adjusted EPS of negative $0.18, down from negative $0.15 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Commercial Vehicle Group to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.49 will advance to negative $0.25.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Commercial Vehicle Group broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.

Taking a step back, an encouraging sign is that Commercial Vehicle Group’s margin expanded by 10.1 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

Commercial Vehicle Group’s free cash flow clocked in at $8.71 million in Q4, equivalent to a 5.6% margin. Its cash flow turned positive after being negative in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Commercial Vehicle Group historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 1.4%, lower than the typical cost of capital (how much it costs to raise money) for industrials companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Commercial Vehicle Group’s ROIC has unfortunately decreased significantly. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

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’s $144.1 million of debt exceeds the $33.28 million of cash on its balance sheet. Furthermore, its 6× net-debt-to-EBITDA ratio (based on its EBITDA of $17.9 million over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Commercial Vehicle Group could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope Commercial Vehicle Group can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

We were impressed by how significantly Commercial Vehicle Group blew past analysts’ revenue expectations this quarter. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. On the other hand, its EPS missed. Zooming out, we think this was a solid print. The stock traded up 24.5% to $2.02 immediately after reporting.

Updated: March 10, 2026 at 11:34 PM EDT

When considering an investment in Commercial Vehicle Group, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Commercial Vehicle Group doesn’t pass our quality test. To kick things off, its revenue has declined over the last five years, and analysts don’t see anything changing over the next 12 months. While its rising cash profitability gives it more optionality, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Commercial Vehicle Group’s EV-to-EBITDA ratio based on the next 12 months is 7.8x. This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $4 on the company (compared to the current share price of $2.02).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.