Big-truck maker Navistar (NYSE:NAV) is a tough company to figure. I thought I had it pegged as a screamer on the highway to hell a while back, but after a fall and some decent-looking numbers, my colleague Stephen Simpson (one smart dude) wonders whether the company isn't worth a double take.
Today's news makes me wonder anew. The firm agreed to acquire kinda-sortaGM (NYSE:GM) affiliate Workhorse Chassis from its private parent, GVW Holdings. (A related parts-distribution company, Uptime Parts, came along.)
Workhorse is a private maker of custom chassis (that's the main skeleton and powertrain of the vehicle) for the recreational-vehicle market, as well as for buses and commercial step vans. What on Earth could Navistar want with this outfit? It's a fair question, given that the firm already makes big trucks.
But with Workhorse, Navistar gets a chassis specialist with a bit of buzz in the burgeoning (according to many observers) RV market. According to the Workhorse website, it's done work for most of the major class-A motor home manufacturers, including Thor Industries (NYSE:THO), Fleetwood (NYSE:FLE), and Winnebago (NYSE:WGO).
If you don't think a chassis matters, try driving one of these giant box kites down an interstate in a crosswind, and then get back to me. If Workhorse's product lives up to some of the RV buzz out there, it should continue to grab market share. In addition to the chassis biz, Workhorse has some interesting aftermarket parts, like the Stabil-Air kit. This add-on allows the driver to raise or lower the vehicle on the fly (as long as the flying is done at less than 35 mph) to clear obstacles high and low, or to level the RV automatically without jacks.
It's still unclear how this shakes out for investors. Navistar didn't release details on what the deal cost, but it says the two firms made sales of $480 million during 2004, which comes to about 5% of the $9.7 billion that Navistar put up on its top line in 2004. Navistar should also have some interesting opportunities to take advantage of manufacturing synergies and integrate their diesel engines into the Workhorse lineup.
If Navistar can deliver on management's promises, it looks like a decent stock for now. But if you're spooked by the ghost of bad numbers past, you might want to wait for the next quarterly results to see whether Navistar can deliver the goods.
For related Foolishness:
- Take a ride on Navistar's wheel of fortune.
- Why can't Navistar's CFO get the math right?
- Navistar looked bad to me back in December.
- And not so hot last May.
- The stock has been chopped back from $47, when it looked like all was well.
Seth Jayson thinks an RV would be a better real estate buy than anything in northern Virginia. At the time of publication, he had positions in no company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.
