NEW YORK (TheStreet) -- Earlier this week, Oshkosh Corporation (OSK - Get Report) won a bid to manufacture 17,000 new vehicles to replace out-of-date Humvees for the U.S. military. The contract is worth $6.75 billion.
Oshkosh beat out other companies, such as, AM General LLC and Lochkeed Martin Corp. (LMT - Get Report) . Oshkosh's contract will have the Wisconsin-based company to build up to 55,000 Joint Light Tactical Vehicles (JLTVs) during the next 25 years, which includes the Humvees.
Here is the Oshkosh's stock recommendation, according to TheStreet Ratings,TheStreet's proprietary ratings tool.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
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Oshkosh Corporation designs, manufactures, and markets specialty vehicles and vehicle bodies worldwide. Its Access Equipment segment offers aerial work platforms and telehandlers used in construction, agricultural, industrial, institutional, and general maintenance applications.
TheStreet Ratings team rates OSHKOSH CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate OSHKOSH CORP (OSK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- OSK, with its decline in revenue, slightly underperformed the industry average of 15.4%. Since the same quarter one year prior, revenues fell by 16.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Machinery industry and the overall market, OSHKOSH CORP's return on equity is below that of both the industry average and the S&P 500.
- OSHKOSH CORP's earnings per share declined by 7.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OSHKOSH CORP increased its bottom line by earning $3.61 versus $3.54 in the prior year. For the next year, the market is expecting a contraction of 14.1% in earnings ($3.10 versus $3.61).
- You can view the full analysis from the report here: OSK Ratings Report