2024-06-12 10:25:27 ET
Summary
- Oshkosh shares have pulled back 15% due to what I believe are concerns about slowing non-residential construction activity and upcoming margin compression.
- The non-residential construction outlook is complicated, with weakness in office, warehouse, and industrial segments but growth in infrastructure and utility spending, as well as opportunities like data centers.
- Ramping up the NGDV contract with the USPS will pressure margins in the short term, but opportunities in vocational businesses look more promising as higher prices move into revenue.
- Oshkosh shares look a little undervalued today, but I don't see enough of a discount to merit the risk of weaker than expected end-markets and/or greater than expected margin compression in the near term.
These are “interesting” days for manufacturers of construction equipment and heavy machinery, as companies try to navigate a more complicated mix of positive and negative drivers. Investors don’t typically like those “interesting” times, and Oshkosh ( OSK ) shares have pulled back about 15% from their April high on growing worries about the impact of slowing non-residential construction activity and upcoming margin compression from product investments and the ramp of the Next Generation Delivery Vehicle (or NGDV)....
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Oshkosh Offers A Complicated Puzzle As Non-Residential Activity Decelerates