Oshkosh Corporation (OSK) stands to benefit from strong overseas demand for emergency equipment and a recovery in the U.S. housing sector. The Wisconsin-based specialty truck maker has delivered 13 straight positive earnings surprises, including a roughly 44% surprise in the most recent quarter. With low valuation metrics, including a price-to-sales (P/S) ratio at just 0.3, this Zacks #1 Rank (Strong Buy) is a value play.
Thirteenth Straight Beat
On October 26, Oshkosh posted fiscal fourth-quarter adjusted earnings of 65 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents. This company has now topped the Zacks Consensus Estimate for a very impressive 13 consecutive quarters.
Revenues, however, edged lower by 2.3% year over year to $2.06 billion. Healthy growth across all non-defense segments was offset by a decline in the core defense business.
Revenues from the Access Equipment segment jumped 15.6% to $716 million, benefiting from higher volume in North America and price increases. Fire and Emergency segment sales climbed 14.3% to $228.9 million, while revenues from the Commercial unit soared 34.2% to $181.5 million. However, the company's Defense division was the weak spot in the quarter with sales slipping 18.6% to $953.7 million.
Oshkosh reaffirmed its earnings from continuing operations target for fiscal 2013 of between $2.35 and $2.60 per share. Over the next 3 years, it aims to double its adjusted earnings from that of fiscal 2012. Oshkosh expects a recovery in housing to benefit its access equipment business, which includes telehandlers used in housing construction.
Separately, the company snubbed a roughly $3 billion takeover offer from Carl Icahn, its largest stakeholder, citing the bid of $32.50 per share as inadequate and not in the best interest of its shareholders.
Earnings Momentum Rising for Fiscal 2013
The Zacks Consensus Estimate for fiscal 2013 is up 3.2% in the last 30 days to $2.61 per share, reflecting a projected annualized growth of nearly 15%. There have been 7 upward revisions out of 12 total estimates in the past month, and also 2 upward revisions in the past 7 days.
A Value Stock
Oshkosh has a lot to attract investors seeking value. In addition to a low P/S, the stock has an attractive forward P/E ratio of 10.97. It also sports a low price-to-book (P/B) ratio of 1.5. (A P/S ratio lower than 1.0, a P/E below 15.0 and a P/B ratio under 3.0 generally indicate value.)
Oshkosh's shares have performed reasonably well so far this year, generating a year-to-date return of roughly 27%. The stock has outperformed the S&P 500 over the past year, delivering a return of roughly 37% versus 14% for the benchmark.