Billionaire Carl Icahn Revs His Engine in Navistar International Corp (NAV)

Oshkosh trades at 13 times trailing earnings, with the sell-side somewhat bullish on the business’s future prospects; as a result, the five-year PEG ratio is 0.8. Its stock price has more than doubled in the last year, though while earnings have been doing well the company’s reports show a flatter performance in terms of revenue. Paccar recorded an 18% decline in sales in the first quarter of 2013 versus a year earlier, and net income dropped by 28%. Given this performance, and the fact that the forward P/E is 16 even with analysts projecting a recovery in the financials next year (which we wouldn’t want to depend on) we would avoid the stock.

Navistar can also be compared to Hyster-Yale Materials Handling Inc (NYSE:HY) and Wabash National Corporation (NYSE:WNC). These stocks are priced at considerable discounts to the other three companies we’ve discussed, with forward earnings multiples in the 10-11 range. With each of these companies experiencing double-digit earnings growth in their most recent quarterly report compared to the same period in the previous fiscal year, they might be more interesting prospects from a value perspective.

We’ll certainly keep an eye on Icahn’s (and Rachesky’s) activities in Navistar, but at least for now the company is still highly dependent on turning around its business. While Wall Street analysts are optimistic about its ability to earn profits next year, the earnings they are forecasting are still too low to justify the current valuation and so Navistar would have to grow beyond that point. As a result we wouldn’t be interested in buying right now.

Disclosure: I own no shares of any stocks mentioned in this article.