As most of the firms on Wall Street queue up to report their end-of-year numbers, truck-maker Oshkosh (NYSE:OSK) is once again a step ahead of the pack. When it reports its earnings news tomorrow, it's fiscal Q1 2007 that Oshkosh will be talking about.

What analysts say:

  • Buy, sell, or waffle? Seven analysts now follow Oshkosh, with buys outnumbering holds 6-to-1.
  • Revenues. On average, they're looking for 27% sales growth to an even $1 billion.
  • Earnings. Profits, however, are predicted to slump 18% to $0.59 per share.

What management says:
Early in December, while announcing the completion of its purchase of JLG Industries, Oshkosh slipped in a bit of news about what investors can expect to see going forward, earnings-wise. Ex-JLG, Oshkosh is looking to earn between $3.05 and $3.15 this fiscal year (ending September). With JLG as part of the Oshkosh team, expect to see sales north of $6 billion, and profits a bit higher than without JLG, as management says the acquisition will be "modestly accretive to its stand-alone EPS for the fiscal year."

Regarding tomorrow's news in particular, Oshkosh warned to expect the acquisition to cost it about $0.15 per share in reduced profits, so about $0.35 to $0.40 per share, total. Therefore, the analysts' earnings projection you see above appears to be a pro forma number that excludes the effect of the JLG deal, and perhaps a few other "one-time" charges as well.

What management does:
Over the last couple of years, Oshkosh proper has done a fine job of keeping each of its rolling gross, operating, and net margins expanding. Since JLG is even more profitable than Oshkosh proper, I'd expect to see this trend continue, barring an industrywide decline in business.

Margins

6/05

9/05

12/05

3/06

6/06

9/06

Gross

16.4%

16.7%

17.0%

17.0%

17.6%

17.7%

Operating

8.8%

9.1%

9.3%

9.3%

9.7%

9.9%

Net

5.3%

5.4%

5.6%

5.6%

5.9%

6.0%
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:
As I mentioned three months ago, I think the JLG acquisition was a very smart move. The new division sports higher margins and faster growth than Oshkosh proper, yet it was acquired for just a small premium to Oshkosh's own valuation.

That said, in practice we'll want to keep a close eye on the newly enlarged entity to ensure that it at least maintains "old Oshkosh's" high levels of profitability and working capital management. Over the last six months, growth in inventories, accounts receivable, and raw materials costs has stayed comfortably at or below the level of sales growth. While selling, general, and administrative costs rose a bit faster, I suspect that's due at least in part to the expense of conducting due diligence on the firm's target. It's going to be hard for the new-and-improved Oshkosh to improve on that performance. Personally, I'd be happy just to see it continue at par for the course, on a larger revenue base.

Competitors:

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

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

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Fool contributor Rich Smith does not own shares of any company named above.