What the government giveth, it can taketh away. While Oshkosh (OSK) reaped some significant growth from its tactical truck business while Department of Defense budgets were flush, tighter budgets have brought down expectations and valuation significantly. While Oshkosh is going to be hard-pressed to fully neutralize tougher defense comps with better sales of commercial trucks, fire/emergency vehicles, and access equipment, the undemanding valuation nevertheless makes this one worth a little due diligence.
Feast And Famine From The Public Purse
More than half of Oshkosh's revenue comes from its defense business, and that's quite clearly not a "private payer" market. But it's not just the federal government that underwrites a lot of Oshkosh's business. While the company has leading share in airport, fire, and rescue vehicles, vehicle sales in these markets depend significantly on state and municipal budgets. All in all, then, something north of 70% of Oshkosh's revenue is derived from some sort of government spending.
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For Oshkosh, Offense Is Better Than Defense
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