Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



A Specialty Vehicle Company Highly Focused on the Bottom Line

Oshkosh (NYSE: OSK  ) faces a strong headwind due to the sequester and reduced Department of Defense spending. But the specialty truck company also sees strength in other areas, and it has a plan in place to cut costs and improve its bottom line over the long haul. 

Recent results and expectations
Oshkosh operates in four different segments: Access equipment, Defense, Fire and Emergency, and Commercial.

Overall, its third quarter showed top-line growth, with net sales increasing 2.1% to $2.2 billion year over year. Diluted earnings per share came in at $1.67, versus just $0.84 in the year-ago quarter. Oshkosh attributes the latter improvement to its Move strategy, which basically comes down to segment optimization and cost-cutting for margin improvement. Its cost of sales fell to $1.8 billion vs. $1.9 billion in the year-ago quarter. By buying back 1.1 million shares, Oshkosh added $0.07 per share to its bottom line.

Oshkosh likes to look at the big picture, as evidenced by its FY 2015 EPS goal of $4.00-$4.50. Defense sales are expected to decline, mostly due to the sequester, but Oshkosh believes that the continued implementation of its Move strategy still makes that big goal attainable.

Now let's look ahead to the not-so-distant future.

Quick segment breakdown

Access equipment is Oshkosh's strongest segment. Sales here jumped 15.6% to $941.5 million in the third quarter, mostly thanks to replacement demand in North America, higher pricing, and improved aftermarket sales.

  • Access equipment FY 2013 sales expectation:  $3.1 billion
  • Previous access equipment FY 2013 sales expectation:  $2.8 billion-$3.0 billion

Defense sales dropped 8.2% to $879.6 million, with Department of Defense sales declining $280 million. Government demand should continue to weaken in the sequester's wake and the winding down of combat in Iraq and Afghanistan. However, Oshkosh has seen higher international sales of mine-resistant ambush-protected all-terrain vehicles -- mostly to the Middle East.

  • Defense FY 2013 sales expectation:  $3.1 billion
  • Previous Defense FY 2013 sales expectation:  $3.1 billion-$3.2 billion

In Fire and Emergency, sales plummeted 11% to $204.3 million. While sequestration will hurt government sales, continued strong municipal demand (in certain areas) is expected to pick up the slack in this division.

  • Fire and Emergency FY 2013 sales expectation:  $800 million
  • Previous Fire and Emergency FY 2013 sales expectation:  $720 million-$750 million

There have been no substantial trends in the commercial segment, and FY 2013 sales expectations remain at $720 million-$750 million.

Overall, the company's expectations are more positive than negative, but that doesn't mean it's a better investment than its peers. Let's take a quick look.

Similar investment options
Oshkosh, with a market cap of $4.0 billion, is slightly larger than Terex (NYSE: TEX  ) , which operates as an equipment manufacturer of specialized machinery products. And then there's Federal Signal (NYSE: FSS  ) , which supplies everything from emergency vehicles to aerial platforms to street cleaning vehicles, and it has a market cap of just about $795 million, making it a much smaller company than its aforementioned peers. 

Oshkosh has been the most impressive of this group for top-line growth over the past five years.

OSK Revenue TTM Chart

Oshkosh revenue trailing-12 months data by YCharts

The same can be said for earnings growth.

OSK EPS Diluted TTM Chart

Oshkosh EPS diluted trailing-12 months data by YCharts

Therefore, it should come as no surprise that Oshkosh has been the best performer over this time frame:

OSK Chart

Oshkosh data by YCharts

Oshkosh also looks fundamentally sound based on the following margins:


Forward P/E

Net Margin


Dividend Yield

Debt-to-Equity Ratio

Short Position















Federal Signal







Source: Company financial statements.

This information, combined with revenue and EPS trends as well as historical stock performance, makes Oshkosh look like the best investment in its peer group. 

The Foolish bottom line
Oshkosh will continue to cut expenses in non-growth areas, which, in addition to share buybacks, should aid the bottom line. As far as the top line is concerned, Oshkosh should see growth in Access Equipment and Fire and Emergency, but not in Defense and Commercial.

It's therefore possible that Oshkosh's shares could rise -- but the U.S. government spending cuts are a big headwind that should temper any enthusiasm and could lead to a very bumpy road. However, thanks to the company's diversification, fiscal responsibility, and  strong management, Oshkosh should remain a long-term winner.

1 more company with truckloads of appeal

Solid companies selling at depressed prices have consistently helped generations of the world's most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. For one such company, read our free report: "The One REMARKABLE Stock to Own Now." Just click here to get started.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2645673, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:46:32 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,335.99 192.54 1.06%
S&P 500 2,169.45 18.32 0.85%
NASD 5,314.59 45.44 0.86%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 11:30 AM
FSS $13.29 Up +0.15 +1.14%
Federal Signal CAPS Rating: ***
OSK $56.35 Up +2.01 +3.70%
Oshkosh Corporatio… CAPS Rating: ***
TEX $25.26 Up +0.97 +3.99%
Terex CAPS Rating: *****