Reviewing ZTO Express (Cayman) (NYSE:ZTO) and REV Group (NYSE:REVG)

REV Group (NYSE:REVG) and ZTO Express (Cayman) (NYSE:ZTO) are both transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.

Earnings & Valuation

This table compares REV Group and ZTO Express (Cayman)”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
REV Group	$2.38 billion	0.99	$257.60 million	$1.88	25.68
ZTO Express (Cayman)	$6.07 billion	2.00	$1.21 billion	$1.58	12.82

ZTO Express (Cayman) has higher revenue and earnings than REV Group. ZTO Express (Cayman) is trading at a lower price-to-earnings ratio than REV Group, indicating that it is currently the more affordable of the two stocks.

Dividends

REV Group pays an annual dividend of $0.24 per share and has a dividend yield of 0.5%. ZTO Express (Cayman) pays an annual dividend of $0.68 per share and has a dividend yield of 3.4%. REV Group pays out 12.8% of its earnings in the form of a dividend. ZTO Express (Cayman) pays out 43.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. REV Group has raised its dividend for 1 consecutive years.

Volatility and Risk

REV Group has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500. Comparatively, ZTO Express (Cayman) has a beta of -0.18, suggesting that its share price is 118% less volatile than the S&P 500.

Institutional and Insider Ownership

41.7% of ZTO Express (Cayman) shares are owned by institutional investors. 1.7% of REV Group shares are owned by insiders. Comparatively, 41.3% of ZTO Express (Cayman) shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares REV Group and ZTO Express (Cayman)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
REV Group	4.16%	23.99%	7.73%
ZTO Express (Cayman)	20.77%	15.91%	10.65%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for REV Group and ZTO Express (Cayman), as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
REV Group	1	1	2	0	2.25
ZTO Express (Cayman)	0	1	3	1	3.00

REV Group currently has a consensus target price of $42.25, indicating a potential downside of 12.47%. ZTO Express (Cayman) has a consensus target price of $21.76, indicating a potential upside of 7.46%. Given ZTO Express (Cayman)’s stronger consensus rating and higher possible upside, analysts clearly believe ZTO Express (Cayman) is more favorable than REV Group.

Summary

ZTO Express (Cayman) beats REV Group on 12 of the 18 factors compared between the two stocks.

About REV Group

REV Group, Inc., together with its subsidiaries, designs, manufactures, and distributes specialty vehicles, and related aftermarket parts and services in the United States, Canada, and internationally. It operates through three segments: Fire & Emergency, Commercial, and Recreation. The Fire & Emergency segment provides fire apparatus equipment under the Emergency One, Kovatch Mobile Equipment, Ferrara, Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brand names; and ambulances under the American Emergency Vehicles, Horton Emergency Vehicles, Leader Emergency Vehicles, Road Rescue, and Wheeled Coach brand names. The Commercial segment offers transit buses, type A school buses, sweepers, and terminal trucks under the Collins Bus, Eldorado National (California), Magellan, Capacity, and LayMor brand names. The Recreation segment offers motorized and towable RV models under the American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs, and Lance Camper brands; and produces a range of custom molded fiberglass products. The company sells its products to municipalities, government agencies, private contractors, consumers, and industrial and commercial end users through its direct sales force or dealer network. The company was formerly known as Allied Specialty Vehicles, Inc. and changed its name to REV Group, Inc. in November 2015. REV Group, Inc. was incorporated in 2008 and is based in Brookfield, Wisconsin.

About ZTO Express (Cayman)

ZTO Express (Cayman) Inc. provides express delivery and other value-added logistics services in the People's Republic of China. It offers freight forwarding services; and delivery services for e-commerce and traditional merchants, and other express service users. The company was founded in 2002 and is headquartered in Shanghai, the People's Republic of China.