Truck maker Oshkosh (NYSE:OSK) reports fiscal fourth-quarter and full-year 2006 earnings results tomorrow morning. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? Six analysts follow Oshkosh, with buys outnumbering holds 5-to-1.
  • Revenues. On average, they're looking for 12% sales growth to $919.3 million .
  • Earnings. . and a 24% jump in profits to $0.72 per share.

What management says:
The big news this quarter was certainly the decision to acquire JLG Industries (NYSE:JLG), a maker of aerial work platforms, telehandlers (sort of like big forklifts), and trailers, for $28 per share. Oshkosh characterized this as a $3.2 billion transaction including transaction costs and assumed debt -- but because JLG had about $90 million more in cash than it did in debt on its balance sheet at last report, I'd say it looks more like a $2.9 billion deal.

Management justified the purchase by saying it met its criteria of only buying companies in "complementary markets" (trailers and load-movers being natural complements to trucks), commanding "market leadership, strong management, double-digit growth opportunities and the expectation of earnings in excess of our cost of capital." Regarding those attributes, I'd just point out that JLG is the market leader in at least two of its three business lines: telehandlers and aerial work platforms.

What management does:
As I'll explain below, I think this is a good acquisition, and not one Oshkosh "had" to make to turn its own fortunes around. As shown in this table, Oshkosh has done a fine job in its own right of expanding gross, operating, and net margins over the last 18 months or so.

Margins %

3/05

6/05

9/05

12/05

3/06

6/06

Gross

16.9

16.4

16.7

17.0

17.0

17.6

Op.

9.0

8.8

9.0

9.2

9.2

9.6

Net

5.4

5.3

5.4

5.6

5.6

5.9
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
At $2.9 billion, Oshkosh is paying roughly 1.26 times sales for JLG -- which I think is a very attractive price relative to the 1.12 times sales valuation that Oshkosh's own shares command. The main reason for the difference between the two valuations is that while Oshkosh is itself expected to grow 18% per annum over the next five years (a remarkable clip for a "smokestack" industry company), JLG is expected to grow faster still. According to Wall Street's best and brightest, Oshkosh will be growing its profits at a 29% clip over the next five years; according to Oshkosh, it's looking for JLG to expand sales at 20% to 25%. If those estimates are anywhere near correct, it shouldn't take much margin improvement at all to achieve the profits numbers Wall Street is expecting.

Speaking of which, I'll add a final note that you should expect Oshkosh's own firmwide margins to improve if and when the JLG acquisition goes through. Over the last 12 months, JLG has scored slightly higher margins than Oshkosh at each of the gross, operating, and net margin levels.

Competitors:

  • Gehl (NASDAQ:GEHL)
  • Armor Holdings (NYSE:AH)
  • Federal Signal (NYSE:FSS)
  • Terex (NYSE:TEX)
  • Trinity Industries (NYSE:TRN)

There's a big difference between this Oshkosh and the one you were probably thinking of. Find out what it is in:

To find out what more than 11,500 fellow investors think about Oshkosh -- and add your voice to the mix -- check out CAPS , the Fool's new community-intelligence stock-rating tool.

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.