Commercial Vehicle Group Finally Seeing Margin Leverage As The Peak Approaches

It has taken longer than expected, but Commercial Vehicle Group (CVGI) is at last seeing meaningful margin leverage and solid incremental margins in response to significant volume growth in the commercial truck and off-road vehicle segments. Now, the question is how well the company can do before North American commercial truck orders peak and decline, and how much growth in businesses outside of heavy-duty trucks can compensate.

CVGI’s valuation is tricky, as is often the case for cyclical companies and especially when key cycles are at or near peaks. On one hand, even on what would seem to be a modest forward EBITDA multiple, the shares appear cheap, and likewise with DCF, but it is very much an open question as to whether CVGI can hold these improved margins as volume in its core business declines and as investors shy away from the sector.

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Commercial Vehicle Group Finally Seeing Margin Leverage As The Peak Approaches