Companies that Outperform Judgment: Oshkosh Corporation (OSK) and More

With the construction industry regaining its health and helping create demand for its downstream and upstream businesses, Oshkosh Corporation (NYSE:OSK) has certainly had a good start this year. Finally, this global leader in access equipment and other specialty vehicles is on the mend after shares hit rock bottom amid the campaign of its major shareholder Carl Icahn to gain control of the company last year.

In December the 76-year-old billionaire-shareholder scrapped his takeover plans, as his $32.50 per share offer generated tenders of only 22% out of the 25% threshold Icahn needed to install 13 directors on the Oshkosh board. Previous to the tender offer, he also failed to have his six candidates seated on the company’s board during the company’s annual meeting in January 2012. Icahn’s tender offer has been viewed by Oshkosh top executives and several Wall Street watchers as undervaluing the company. Notably, OSK hit a 52-week low of $15.76 in September last year, prior to the Icahn tender offer announced in October.

Oshkosh Corporation (NYSE:OSK)It’s Hard to Argue against Success

Icahn’s beef against the current Oshkosh management was its $3.2 billion purchase of JLG Industries, a company selling construction-access equipment such as lifts and booms, in 2006. JLG’s sales spiralled downward by nearly 70% along with the collapse of the US construction industry during the Great Recession. Icahn had argued that this business should be sold. The recent upturn of the building industry, however, puts Oshkosh in a position to profit from the opportunities available in the construction sector.

Besides, whatever doubts that Icahn may have on the incumbent Oshkosh management’s capability to run the company profitably have been dashed lately with the company reporting robust growth in its fiscal first quarter earnings. This January, the company, which also makes specialty trucks, reported that its earnings for the quarter grew by 20% on account of lower input costs, which negated the soft performance of its defense segment. These results easily topped expectations, prompting the company to raise its earnings forecast for its fiscal year to an adjusted per-share earnings of between $2.80 and $3.05, up from its earlier forecast of $2.35 and $2.60.

Tracking Shifts in Management Leadership

Terex Corporation (NYSE:TEX) is one company to track in Oshkosh’s industry sector as to how some recent senior leadership changes will affect the bottom line. Among other top executive movements, the current president of the company’s Terex Cranes unit, Phil Widman, has been appointed as Terex SVP and chief financial officer. These key management changes involve most of the company’s operations in the manufacture of a wide range of industrial equipment, including those used by construction companies.

Signs of recovery in non-residential construction prompted some stock analysts to upgrade their recent rating on Terex from underperform to neutral; other ratings of late include a hold based on the company’s revenue growth and good operating cash flow, which were tempered by unimpressive earnings growth and poor profit margins. It is also significant to note that Terex shares hit a new 52-week high of $33.52 just this Feb. 8.

Riding On the Rising Tide of Construction

In a nutshell, the nascent recovery of the US construction industry will be pivotal to the fortunes of companies like Oshkosh and Terex. Count the near-term prospects for Federal Signal Corporation (NYSE:FSS) as well. The managers of this company, which reported a 9.5% decline in revenue in its recent quarterly performance, may have to refocus themselves.

For one, Federal Signal’s equipment inventories for the construction market are reportedly gathering dust on warehouse shelves. The company’s executive team will definitely need some rethinking of its decision to focus company resources on the aerial equipment market; instead, they need to look for growth opportunities in the building industry.

After all, in hindsight Oshkosh’s firm resolve to keep Icahn’s peeve, JLG Industries, has a redeeming value with the construction and building industry now poised as a main primer to the US economic recovery and a great source of growth opportunities.

The article Companies that Outperform Judgment originally appeared on Fool.com and is written by Josef Ray Dagatan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!