Company Reports

Narrow-moat Oshkosh reported solid first-quarter results, and we have increased our fair value estimate to $122 per share from $115. The change is largely attributable to our stronger near-term sales and margin expectations.

We think Oshkosh will continue to be the top player across its end markets. Its enviable competitive positioning is underpinned by its ability to make strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

We think Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

We raised our fair value estimate by 5% to $115 per share (up from $110 previously), following solid fourth-quarter earnings. Oshkosh increased sales by nearly 12% year on year, thanks to solid growth in access equipment (up 7%) and defense segments (increased 7%). The AeroTech acquisition positively affected vocational business sales, which contributed $176 million to segment sales in the quarter, or 24% of sales. In total, the segment’s sales were up 26% compared with the same period last year.

We think Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

Oshkosh posted solid third-quarter earnings, leading us to increase our fair value estimate by nearly 7% to $110 (from $103 previously). We attribute nearly 6 percentage points of the fair value increase to the time value of money since our last update, with the balance coming from upward adjustments to our near-term forecast.

We think Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

Investors reacted positively to Oshkosh’s second-quarter earnings, which showed earnings per share of $2.69, nearly 64% above FactSet consensus bottom-line estimates. The company’s shares were up 10% in intraday trading. EPS performance was higher than we were expecting, which led us to raise our near-term sales and margin forecasts. As a result, we raised our fair value estimate to $103 from $99 previously.

We believe Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

On May 30, Oshkosh announced its acquisition of AeroTech from John Bean Technologies for approximately $800 million. Management expects to close the deal in third-quarter 2023. Overall, we think the deal will be accretive to Oshkosh's earnings, leading us to increase our fair value estimate to $99 from $91. In our view, Oshkosh paid a fair price for a business well positioned to benefit from growing air passenger traffic and U.S. infrastructure spending focused on airport revitalization. The deal multiple came out to 7.2 times EV/forward EBITDA, including run-rate synergies and expected tax benefits.

We believe Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

After reviewing Oshkosh’s first-quarter earnings, we elected to maintain our $91 fair value estimate. We saw no major surprises in the earnings update.

We believe Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

We believe Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

We believe Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

On Feb. 9, the U.S. Department of Defense, or DOD, announced that it was awarding the joint light tactical vehicle, or JLTV, contract to AM General. The contract winner is best known for manufacturing the Humvee, which was the predecessor to the JLTV. Recall, Oshkosh won the JLTV program in 2015, as it presented a vehicle platform that was superior to the Humvee (improved safety significantly). Today, the tables have turned, with Oshkosh losing the recompete.

Oshkosh’s fourth-quarter results showed sales growth of approximately 23%, bringing the company’s top line to $2.2 billion. The access equipment, fire and emergency, and commercial segments led the way, growing 29%, 37%, and 34%, respectively. Recall that the year-ago period was significantly affected by supply headwinds, making it an easier comparison period. That said, supply chain constraints persist for Oshkosh, evidenced by management’s comments around production inefficiencies and price/cost headwinds. Zooming out for a second, the industrial names we cover have started to share that supply chains are starting to improve, providing some comfort for future profit margins. We think the same dynamic will play out in Oshkosh’s case over time, but the near term will remain challenged, in our view.

We believe Oshkosh will continue to be the top player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.

Oshkosh’s third-quarter results were roughly in line with our expectations, leading us to leave our $107 fair value estimate unchanged. We made slight downward tweaks to our near-term forecast, but this was offset by the time value of money since our last update. Management reaffirmed guidance for sales of $8.1 billion-$8.6 billion in 2022 versus our forecast of $8.2 billion. Our estimate is below the midpoint largely because of the company’s ongoing challenges in the supply chain. The company had already cut 2022 EPS guidance to $3.50 from the $5-$6 it gave in the second quarter. The key callouts at the time were rising cost inflation and manufacturing inefficiencies. We see these factors affecting the company through the remainder of 2022.

We believe Oshkosh will continue to be a leading player across its end markets. The company’s enviable competitive positioning is underpinned by its ability to produce strong-performing products that exhibit high durability. Remarkably, Oshkosh has been able to replicate its brand strength in unrelated end markets, such as aerial lifts and commercial vehicles (military, fire, and emergency). Despite having very few synergies among its businesses, Oshkosh has been adept at implementing its technology across vehicle platforms.