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Why Is Oshkosh (OSK) Down 1.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Oshkosh (OSK). Shares have lost about 1.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Oshkosh due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Oshkosh's Q3 Earnings & Sales Top, Down Y/Y

Oshkosh Corporation recorded third-quarter fiscal 2020 (ended Jun 30, 2020) earnings of $1.29 per share, down from $2.72 recorded in the year-ago period amid coronavirus-led low demand.

However, fiscal third-quarter earnings handily surpassed the Zacks Consensus Estimate of 47 cents per share. This outperformance stemmed from stellar Defense segment revenues, which came in at $548 million, beating the consensus mark of $516 million. Notably, the Defense segment generated higher revenues and income than the year-ago period.

For the reported quarter, consolidated net sales declined 33.9% from the prior-year period to $1,581 million. Nonetheless, revenues surpassed the Zacks Consensus Estimate of $1,541 million.

For the fiscal second quarter, consolidated operating income slipped 54% year over to $118.6 million (accounting for 7.5% of sales).

Segmental Details

For the reported quarter, net sales in Access equipment decreased 61% year over year to $488 million. Operating income also plunged 82.4% from the prior-year quarter to $33.5 million (6.9% of sales). This downside was primarily due to the impact of lower sales volume and adverse absorption amid slowdown in production due to the COVID-19 crisis.

The Defense segment’s net sales increased 7.1% year over year to $547.5 million for the fiscal third quarter on higher sales resulting from persistent ramp up of JLTV sales to the U.S. government. Operating income climbed 35.6% from the year-ago quarter to $40 million (5.8% of sales) on higher sales volume and cost-cut efforts during the quarter.

Net sales in the Fire & Emergency segment dropped 8.9% from a year ago to $310.7 million for the fiscal third quarter due to low production rates and supplier parts shortage as a result of the pandemic-related setbacks. Operating income also decreased 6.1% from the prior-year figure to $47.6 million (15.3% of sales) due to the impact of lower sales volume, unfavorable product mix and product inefficiencies.

Net sales in the Commercial segment edged down 16.3% from the year-ago figure to $247.7 million for the fiscal third quarter amid coronavirus woes. The segment’s operating income was up 10.7% from the prior-year period to $23.8 million (9.6% of sales), mainly owing to the absence of weather-related production disruptions that were experienced in the prior-year quarter.

Financials & Dividend

Oshkosh had cash and cash equivalents of $331.6 million as of Jun 30, 2020. The company’s long-term debt was $817.6 million. Net cash provided by operating activities during the quarter was $36.4 million.

Oshkosh’s board announced a quarterly cash dividend of 30 cents per share for shareholders. The amount will be paid on Aug 31 to shareholders of record as of Aug 17, 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Oshkosh has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Oshkosh has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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