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J.P. Morgan and Credit Suisse Upgrade Oshkosh Corporation

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Price movement

Oshkosh Corporation (OSK) has a market cap of $3.9 billion. It rose 3.0% to close at $52.42 per share on September 26. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -7.7%, -3.6%, and 36.1%, respectively, on the same day. OSK is trading 4.8% below its 20-day moving average, 1.7% below its 50-day moving average, and 20.9% above its 200-day moving average.

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Related ETFs and peers

The PowerShares Aerospace & Defense Portfolio (PPA) invests 1.3% 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 for PPA was 9.6% on September 26.

The iShares Morningstar Small Value ETF (JKL) invests 0.71% of its holdings in Oshkosh. The ETF tracks a market cap–weighted index of US small-cap value stocks. The index stocks from the 90th to the 97th percentiles of the market cap spectrum, using fundamental factors.

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

  • Terex Corporation (TEX) — $2.5 billion
  • Caterpillar (CAT) — $48.1 billion

Oshkosh’s rating

JPMorgan has upgraded Oshkosh Corporation’s rating to “overweight” from “neutral” and also set the stock’s price target at $60.0 per share.

Credit Suisse has upgraded Oshkosh Corporation’s rating to “neutral” from “underperform.” It also increased the stock’s price target to $54.0 from $50.0 per share.

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Performance in fiscal 3Q16

Oshkosh (OSK) reported fiscal 3Q16 net sales of $1.7 billion, a rise of 6.2% from the net sales of $1.6 billion in fiscal 3Q15. Sales in its Access Equipment, Defense, and Fire and Emergency segments rose 2.1%, 36.1%, and 24.4%, respectively. Sales in its Commercial segment fell 2.1% between fiscal 3Q15 and fiscal 3Q16. The company’s gross profit margin and operating income rose 2.2% and 7.5%, respectively.

Its net income fell to $84.2 million in fiscal 3Q16, compared with $89.7 million in fiscal 3Q15. It reported EPS (earnings per share) of $1.13 in fiscal 3Q15 and fiscal 3Q16.

Oshkosh’s cash and cash equivalents rose 6.1%, and its inventories fell 3.6% between fiscal 4Q15 and fiscal 3Q16. Its current ratio fell to 1.6x and its DE (debt-to-equity) ratio rose to 1.5x in fiscal 3Q16, compared with a current ratio and DE ratio of 1.7x and 1.4x, respectively, in fiscal 4Q15.

Projections

Oshkosh (OSK) made the following projections for 2016:

  • revenue in the range of $6.1 billion to $6.2 billion
  • adjusted EPS in the range of $2.85 to $3.00
  • adjusted operating income in the range of $360 million to $375 million

The company reported that “fiscal 2016 adjusted results exclude expected restructuring charges of $27.0 million resulting from the Company’s decision to outsource certain aftermarket parts distribution center and logistics operations in the U.S. and Europe in the Company’s access equipment segment. The Company expects the EPS impact of these restructuring charges in fiscal 2016 will be $0.23.”

The company has also made the following projections for fiscal 2017:

  • revenue in the range of $6.5 billion to $6.7 billion
  • EPS in the range of $3 to $3.40
  • operating income in the range of $390 million to $430 million

Next, we’ll discuss Foot Locker (FL).

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