Commercial Vehicle Group (CVGI)

Vehicle systems manufacturer Commercial Vehicle Group (NASDAQ:CVGI) beat Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 25.2% year on year to $172 million. The company expects the full year’s revenue to be around $660 million, close to analysts’ estimates. Its non-GAAP loss of $0.09 per share was 28.6% 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 performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Commercial Vehicle Group’s demand was weak and its revenue declined by 1.5% per year. This wasn’t a great result and is a sign of poor business quality.

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 18.2% annually over the last two years. Commercial Vehicle Group isn’t alone in its struggles as the Heavy Transportation Equipment industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, Commercial Vehicle Group’s revenue fell by 25.2% year on year to $172 million but beat Wall Street’s estimates by 6.4%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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 11.6% gross margin over the last five years. That means Commercial Vehicle Group paid its suppliers a lot of money ($88.44 for every $100 in revenue) to run its business.

This quarter, Commercial Vehicle Group’s gross profit margin was 11.4%, in line with the same quarter last year. On a wider time horizon, Commercial Vehicle Group’s full-year margin has been trending down over the past 12 months, decreasing by 2 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Commercial Vehicle Group was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.1% 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 4.8 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’s breakeven margin was down 1.9 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.

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 82.7% annually over the last five years, more than its revenue. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

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 4.8 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.

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

For Commercial Vehicle Group, its two-year annual EPS declines of 55.5% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q2, Commercial Vehicle Group reported adjusted EPS at negative $0.09, down from $0.06 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Commercial Vehicle Group’s full-year EPS of negative $0.33 will reach break even.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and 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, we can see that Commercial Vehicle Group’s margin dropped by 1 percentage points during that time. 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 in the middle of an investment cycle.

Commercial Vehicle Group’s free cash flow clocked in at $17.4 million in Q2, equivalent to a 10.1% margin. This result was good as its margin was 7.3 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative 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 6.6%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

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.

Commercial Vehicle Group reported $45.29 million of cash and $122.3 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $16.2 million of EBITDA over the last 12 months, we view Commercial Vehicle Group’s 4.8× net-debt-to-EBITDA ratio as safe. We also see its $4.78 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

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. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.2% to $1.92 immediately after reporting.

Updated: November 7, 2025 at 10:23 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Commercial Vehicle Group, you should also grasp the company’s longer-term business quality and valuation.

Commercial Vehicle Group falls short of our quality standards. To kick things off, its revenue has declined over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Commercial Vehicle Group’s EV-to-EBITDA ratio based on the next 12 months is 2x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $4 on the company (compared to the current share price of $1.34).

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.