Oshkosh Keeps Trucking

Is Oshkosh Truck (NYSE: OSK  ) a defense company with a commercial business on the side, or a commercial truck maker with a valuable (if volatile) government business segment? And does anybody really care so long as the double-digit operating income growth continues to role in?

While top-line growth is certainly moderating, the company continues to post solid overall performance. Revenue rose about 8% this time around, as the company not only saw slower sales in the defense category, but was also up against a difficult year-ago comparison. Nevertheless, the company saw significant leverage on the gross margin line and preserved about two-thirds of that at the operating margin line, leading to operating income growth of 31% -- and that's on top of 28% growth last year.

Unlike what we've seen in many quarters, the non-defense businesses were the stallions this time around. Operating profits rose almost 29% in the fire/emergency business, and the commercial business saw a better than threefold jump in profits, as customers bought things like cement mixers and refuse trucks ahead of new diesel engine emissions standards. Results were also helped here by a reversal of a year-ago loss in Europe and the absence of a charge.

Whether it's truck makers like Navistar (NYSE: NAV  ) or engine makers like Cummins (NYSE: CMI  ) , plenty of people are worried about what these new emissions standards will mean for the industry. The company is nevertheless looking for double-digit growth in the next fiscal year and management has a reputation for conservatism. It also doesn't hurt that markets like medical equipment and defense aren't going to be quite so exposed to that regulation-induced drop off.

Oshkosh is not terribly expensive on its own, but it does carry a higher multiple than most other truck and truck-related companies (like, say, Accuride (NYSE: ACW  ) ). Then again, it's unlike those companies in that it has essentially no conventional big rig exposure. All in all, I wouldn't feel bad about hanging on to Oshkosh shares if I already owned them, but I wouldn't want to try jumping into the cab today if I wasn't already on board.

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• Defense Is Good Offense for Oshkosh

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).