Here's Why You Should Retain Oshkosh Stock in Your Portfolio

Strong Access Backlog, Acquisitions Strength to Aid Oshkosh

Access demand improved in the second quarter of 2026, with orders of $1.5 billion, a 1.1 book-to-bill ratio and backlog of $1.96 billion as of June 30, 2026, up 64.7% year over year. Mega projects, including data centers, continue to support equipment demand. High utilization and an aged boom fleet also acted as demand supports. OSK expects full-year 2026 Access revenues to grow from 2025, reversing its earlier expectation of a modest decline.

Prior acquisitions continue to broaden Oshkosh’s exposure to airport infrastructure and other end markets. In the second quarter of 2026, Oshkosh AeroTech recorded continued demand for passenger boarding bridges, including orders in Chicago, Denver and Philadelphia. Vocational backlog reached $6.62 billion as of June 30, 2026, up 5.6% year over year, supported by municipal fire apparatus and airport products. The company continues to invest in airport capacity and automation, including testing an autonomous ground support robot, as airports pursue expansion and modernization projects that support a longer-duration order base.

Oshkosh's Transport segment is positioned for stronger growth as the Next Generation Delivery Vehicle (NGDV) program ramps up and defense activity gains momentum. Delivery vehicle revenues increased more than 20% sequentially in the second quarter, while the NGDV fleet has surpassed 35 million miles and received positive feedback on safety, productivity and reliability. The company expects another NGDV order, likely in the fourth quarter, alongside higher production and improved contract pricing. Meanwhile, defense momentum is supported by recent $142 million FMTV A2 and $92 million ROGUE-Fires orders, as well as growing interest from international customers. These opportunities could improve Transport profitability and provide revenue visibility beyond 2026. 

Free cash flow improved significantly year over year. It rose to $348 million in the second quarter of 2026 from $49 million a year earlier. The company maintained full-year 2026 free cash flow guidance of $550-$650 million compared with $618 million reported in 2025. Oshkosh continues to return cash through dividends and repurchases. In January 2025, it hiked its dividend for the 11th consecutive year of double-digit percentage increase. Oshkosh repurchased $91.6 million of shares in the second quarter and $138.9 million in the first six months of 2026.

Weak Refuse Business, Profitability Concerns to Ail OSK

The refuse business has remained down in 2026 as some industrial customers remain cautious about capital spending amid uncertainty over the macroeconomic environment.  Refuse and recycling vehicle sales fell to $160.7 million in the second quarter of 2026 from $197 million a year earlier. Unit backlog was down 29.5% as of June 30, 2026, as customers remained cautious on capital spending. While Oshkosh believes the underlying market remains healthy because refuse fleets are aged and waste generation is relatively stable, a recovery may not occur until 2027. This creates a near-term drag on the Vocational segment.

Although Access demand is improving, profitability remains pressured by adverse product and customer mix and unfavorable price-cost dynamics. Access adjusted operating margin was 11.3% in the second quarter of 2026 versus 14.8% a year earlier, despite 9.4% sales growth. The timing of broader recovery in non-residential construction remains uncertain, which could continue to affect customer mix. While Oshkosh expects to remain price-cost neutral for 2026, the need to recover tariff-related costs through pricing creates a potential margin headwind if cost increases cannot be fully passed on to customers.  

The biggest near-term challenge is slower-than-expected improvement in fire truck production. Oshkosh is making significant changes to its manufacturing process, but throughput is improving more gradually than initially expected. As a result, the company now expects to produce and ship fewer fire trucks in 2026 than previously planned, reducing full-year adjusted EPS expectations to around $11. Although the manufacturing changes are intended to improve efficiency over the long term, execution risks remain during the transition, particularly because the fire truck business has thousands of parts and complex supplier and material-flow requirements.

Price Performance, Valuation and Estimates  

Oshkosh has underperformed the Zacks Automotive - Domestic industry in the last six months. Its shares have lost 15.3% compared to the industry’s decline of 7.6%. 

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From a valuation perspective, OSK appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.8, lower than the industry’s 3.23. 

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The Zacks Consensus Estimate for Oshkosh’s 2026 and 2027 EPS has declined 28 cents and improved 14 cents, respectively, in the past 30 days.

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Stocks to Consider

Some better-ranked stocks in the auto space are Geely Automobile Holdings Limited GELHY and Garrett Motion Inc. GTX, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for GELHY’s 2026 sales and earnings implies year-over-year growth of 77.1% and 43%, respectively. The EPS estimate for 2026 and 2027 has improved 12 cents and 23 cents each over the past seven days.

The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 7.2% and 25.7%, respectively. The EPS estimate for 2026 and 2027 has improved 10 cents each over the past 30 days.

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This article originally published on Zacks Investment Research (zacks.com).

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