Financial instruments are supposed to discount future cash flows; that is, the price of a stock or bond today is supposed to be directly tied to the expected future cash flows tied to the security. If that were not the case, savvy investors would look to buy undervalued assets and sell overvalued assets until the prices were in balance.
Okay, that is Finance 101, but it is a relevant reminder when approaching heavy-duty vehicle maker Oshkosh (NYSE:OSK). Right now this company is booking excellent profits on its defense business, but the valuation multiples are quite puny. Clearly, the investment community is expecting much less from Oshkosh in the future and the real key here is whether business will fall off as much as people currently expect.
The Quarter that Was
We will get to the future in a moment, but let us look at the June quarter (the company's fiscal third quarter) first. Revenue spiked upwards this quarter, more than doubling to $2,439 million. This growth was fueled by a near-tripling of revenue from the defense business, while the access business improved and the fire/emergency segment was down by double-digits.
For the rest of the story:
http://stocks.investopedia.com/stock-analysis/2010/Can-Oshkosh-Keep-On-Truckin-OSK-NAV-FSS-TEX-HTZ0804.aspx
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