Oshkosh (OSK)

Specialty vehicles contractor Oshkosh (NYSE:OSK) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 1.9% year on year to $2.69 billion. The company’s full-year revenue guidance of $10.35 billion at the midpoint came in 2% below analysts’ estimates. Its non-GAAP profit of $3.20 per share was 3.3% above analysts’ consensus estimates.

Company Overview

Oshkosh (NYSE:OSK) manufactures specialty vehicles for the defense, fire, emergency, and commercial industry, operating various brand subsidiaries within each industry.

Heavy transportation equipment companies are investing in automated vehicles that increase efficiencies and connected machinery that collects actionable data. Some are also developing electric vehicles and mobility solutions to address customers’ concerns about carbon emissions, creating new sales opportunities. Additionally, they are increasingly offering automated equipment that increases efficiencies and connected machinery that collects actionable data. On the other hand, heavy transportation equipment companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the construction and transport volumes that drive demand for these companies’ offerings.

Competitors of Oshkosh include Lockheed Martin (NYSE:LMT), Rev (NYSE:REVG), and Terex (NYSE:TEX).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Oshkosh’s sales grew at a decent 8.6% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Oshkosh’s recent performance shows its demand has slowed as its annualized revenue growth of 5% over the last two years was below its five-year trend. We also note many other Heavy Transportation Equipment businesses have faced declining sales because of cyclical headwinds. While Oshkosh grew slower than we’d like, it did do better than its peers.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Oshkosh’s backlog reached $13.69 billion in the latest quarter and averaged 1.9% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, Oshkosh missed Wall Street’s estimates and reported a rather uninspiring 1.9% year-on-year revenue decline, generating $2.69 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 6.7% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.

Oshkosh has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 16.5% gross margin over the last five years. Said differently, Oshkosh had to pay a chunky $83.50 to its suppliers for every $100 in revenue.

In Q3, Oshkosh produced a 17.5% gross profit margin, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Oshkosh was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.8% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Oshkosh’s operating margin rose by 1.8 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Oshkosh generated an operating margin profit margin of 9.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Oshkosh’s EPS grew at an astounding 17.6% compounded annual growth rate over the last five years, higher than its 8.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Oshkosh’s earnings can give us a better understanding of its performance. As we mentioned earlier, Oshkosh’s operating margin was flat this quarter but expanded by 1.8 percentage points over the last five years. On top of that, its share count shrank by 6.1%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Oshkosh, its two-year annual EPS growth of 11.6% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Oshkosh reported adjusted EPS of $3.20, up from $2.93 in the same quarter last year. This print beat analysts’ estimates by 3.3%. Over the next 12 months, Wall Street expects Oshkosh’s full-year EPS of $11.11 to grow 11%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Oshkosh has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4%, subpar for an industrials business.

Taking a step back, we can see that Oshkosh’s margin dropped by 7 percentage points during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. Almost any movement in the wrong direction is undesirable because of its relatively low cash conversion. If the longer-term trend returns, it could signal it’s becoming a more capital-intensive business.

Oshkosh’s free cash flow clocked in at $464.3 million in Q3, equivalent to a 17.3% margin. This result was good as its margin was 7.3 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Oshkosh hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked. Its five-year average ROIC was 13.7%, higher than most industrials businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Oshkosh’s ROIC averaged 2.5 percentage point increases over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

Oshkosh reported $211.8 million of cash and $1.21 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.19 billion of EBITDA over the last 12 months, we view Oshkosh’s 0.8× net-debt-to-EBITDA ratio as safe. We also see its $54.1 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We liked how Oshkosh beat analysts’ backlog expectations this quarter. On the other hand, its revenue and EBITDA both missed Wall Street’s estimates. Full-year guidance was also lowered. Overall, this was a weaker quarter. The stock traded down 4.5% to $131.35 immediately after reporting.

Updated: December 4, 2025 at 9:02 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Oshkosh.

Oshkosh’s business quality ultimately falls short of our standards. Although its revenue growth was good over the last five years, it’s expected to deteriorate over the next 12 months and its cash profitability fell over the last five years. And while the company’s astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its backlog declined.

Oshkosh’s P/E ratio based on the next 12 months is 11x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $150.51 on the company (compared to the current share price of $130.95).