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Oshkosh Corporation Cleared of Legal Challenges for JLTV Contract

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Price movement of Oshkosh

Oshkosh Corporation (OSK) has a market cap of $2.5 billion. OSK rose by 1.1% to close at $34.65 per share as of February 18, 2016. The price movement on weekly, monthly, and year-to-date (or YTD) basis is 11.3%, 3.2%, and -10.7%, respectively.

At times, the stock has broken the support of all moving day averages. Currently, OSK is trading 7.3% above its 20-day moving average, 2.7% below its 50-day moving average, and 14.7% below its 200-day moving average.

The PowerShares Aerospace & Defense Portfolio ETF (PPA) invests 1.0% of its holdings in Oshkosh. The ETF tracks a market-cap-weighted index of US-listed stocks involved in the defense, military, homeland security, and space industries. The YTD price movement of PPA is -7.7% as of February 17, 2016.

The First Trust Mid Cap Core AlphaDex ETF (FNX) invests 0.61% of its holdings in Oshkosh. The ETF seeks to outperform the US midcap sector by choosing stocks from the S&P MidCap 400 Index based on fundamental growth and value factors.

The market caps of Oshkosh’s competitors are as follows:

  • Terex Corporation (TEX) — $2.4 billion
  • Caterpillar (CAT) — $38.5 billion
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Oshkosh is cleared of legal charges

Oshkosh Defense LLC, an Oshkosh Corporation company, is clear of the legal challenge related to the Joint Light Tactical Vehicle (or JLTV) production contract after a competitor withdrew its protest from the US Court of Federal Claims. Oshkosh is working on $6.7 billion JLTV contract after the Court of Federal Claims denied the competitor’s request last week.

Performance of Oshkosh in fiscal 1Q16

Oshkosh reported fiscal 1Q16 net sales of $1,252.0 million, a fall of 7.5% compared to net sales of $1,353.3 million in fiscal 1Q15. The company’s cost of sales as a percentage of net sales rose by 2.4%, and its gross income fell by 20.4% in fiscal 1Q16 compared to fiscal 1Q15.

Its net income and EPS (earnings per share) fell to $14.6 million and $0.19, respectively, in fiscal 1Q16, compared to $34.6 million and $0.43, respectively, in fiscal 1Q15.

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Meanwhile, its cash and cash equivalents and inventories fell by 21.4% and 0.48%, respectively, in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio fell to 1.65x, and long-term debt-to-equity ratio rose to 0.47x in fiscal 1Q16, compared to a current ratio and a long-term debt-to-equity ratio of 1.66x and 0.45x, respectively, in fiscal 4Q14.

The company has declared a quarterly cash dividend of $0.19 per share on its common stock. Also, it purchased 2.5 million shares with cash for $100.1 million in fiscal 1Q16 and 4.9 million shares worth $200.4 million in fiscal 2015.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Oshkosh are 13.0x and 1.4x, respectively, as of February 18, 2016.

Projection

Oshkosh Corporation (OSK) has made the following projections for fiscal 2016 and fiscal 2Q16:

Fiscal 2016

  • net sales to be in the range of $5.7 billion–$6.0 billion
  • EPS to be in the range of $2.20–$2.60.

Fiscal 2Q16

  • It expects the earnings per share to be lower than the fiscal 2Q15 as a result of lower equipment segment sales, telehandler sales, and year-over-year production levels in the access equipment segment.

In the next and final part, we’ll check in with Vista Outdoor.

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