Sometimes, I don't understand Mr. Market. Just plumb don't get how his brain works.
By and large, investors reacted positively to Oshkosh's
That doesn't sound like much, but also recall that last quarter, Oshkosh snipped $2.33 per share from guidance when it wrote down the impaired assets of its European garbage-truck business. But for that loss, we'd be looking at closer to $3.31 per share, and a price-to-earnings ratio of around 4 on this stock.
More bullish still were the details Oshkosh provided on its increased guidance. Management expects to pay down its debt to as little as $2.8 billion -- a reduction of $180 million in just three months -- which suggests an unforeseen surge in cash generation at the company. Cash flow -- exceedingly weak of late -- is now called "strong," and management is husbanding its cash by "selling excess inventory, rationalizing production and pursuing receivables initiatives."
The expected ...
Wall Street's initial response to all of this good news was predictable -- the stock surged nearly 40% through Tuesday's close and even gave rival Terex
... and the not-so-expected
While the initial reaction makes sense, today's does not. Friday's guidance was only the first bit of good out of Oshkosh in recent days, you see. Yesterday, we learned that the Pentagon is moving forward on awarding its long-awaited JLTV program. From what I hear, Oshkosh is a leading contender -- along with partner Northrop Grumman
I think that the potential for billions of dollars of new JLTV revenues, coupled with an actual multimillion-dollar defense contracting award, provide more concrete reasons to own Oshkosh than a single reassurance from management that "really guys, things aren't as catastrophic as they seem. Disastrous at worst."
But hey, I'm just a Fool -- and an Oshkosh shareholder. What do I know?
What's a JLTV, and why could it give Oshkosh's stock a jolt? Find out in: