Is Oshkosh (OSK) a Great Stock for Value Investors?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Oshkosh Corporation OSK stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Oshkosh has a trailing twelve months PE ratio of 16, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.4. If we focus on the long-term PE trend, Oshkosh’s current PE level puts it above its midpoint over the past five years.

However, the stock’s PE compares unfavorably with the Zacks Automotive - Original Equipment industry’s trailing twelve months PE ratio, which stands at 13.8. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.

 

We should also point out that Oshkosh has a forward PE ratio (price relative to this year’s earnings) of just 14.5, so it is fair to say that a slightly more value-oriented path may be ahead for Oshkosh stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Oshkosh has a P/S ratio of about 0.8. This is lower than the S&P 500 average, which comes in at 3.3x right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Oshkosh currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Oshkosh a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for Oshkosh is just 0.8, a level that is lower than the industry average of 1.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, OSK is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Oshkosh might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of B and a Momentum Score of F. This gives OSK a Zacks VGM score — or its overarching fundamental grade — of C. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been pretty encouraging. The current year has seen one estimate go higher in the past sixty days compared to one lower, while the next year estimate has seen two up and one down in the same time period.

This has had a significant impact on the consensus estimate though as both the current year and next year consensus estimates have risen by 0.2% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Oshkosh Corporation Price and Consensus

Oshkosh Corporation Price and Consensus | Oshkosh Corporation Quote

Despite this bullish trend, the stock has a Zacks Rank #3 (Hold) and that is why we are looking for better performance from the company in the near term.

Bottom Line

Oshkosh is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 22% out of more than 250 industries) further strengthens its growth potential. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:

So, despite a Zacks rank #3, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

Can Hackers Put Money INTO Your Portfolio?

Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.

Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.

Download the new report now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research