The U.S. military may not always be the easiest customer to work with, but I don't think Oshkosh Truck
For the fiscal first quarter, this truckmaker posted sales growth of more than 22%. And, as has generally been the case, margins improved once again. Shaking off higher energy and raw-materials prices, gross margin climbed almost a full point and operating margin climbed about half a point. Operating income grew nearly 29%, and reported earnings per share rose by a like amount.
Starting with the largest business (for this quarter, at least), we see that defense sales were up more than 68% on higher sales of parts and trucks like heavy payload vehicles and tankers. While operating income growth lagged sales (up more than 40%), some of that comparison is influenced by favorable contract adjustments and cost recoveries in the year-ago period.
For the other units, fire/emergency saw respectable sales and operating income growth (both in the low teens), while the commercial business saw an 8% sales decline but a nearly 48% jump in operating income. For commercial, sales were hurt by production disruptions, but income was boosted by better profitability from the European business.
Much as I like the company and the improvements that management is making to basic profitability, I haven't been enthusiastic about buying the stock for some time. Yet the stock's continued to rise. I'm OK with that, though. I'd rather look to underpay going into a new position than take the risk of chasing a stock. Of course, once you actually own the thing, I believe you can take a different view and let your profits run as far as the market will take them.
Given what other truck plays like Cummins
Fool contributor Stephen Simpson owns shares of Commercial Vehicle Group but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Motley Fool has a disclosure policy.