Oshkosh's profits stumble as USPS vehicle delays weigh on earnings
Oshkosh Corporation (OSK) has faced a mixed year, with some divisions thriving while others lag behind. Delays in vehicle deliveries to the US Postal Service (USPS) hit profits hard, dragging down overall performance. Despite this, analysts see potential for strong returns and growth in the coming years.
In 2025, Oshkosh Defense struggled due to delayed deliveries of Next Generation Delivery Vehicles (NGVD) to USPS, which impacted informed delivery. Only 1,000 of the planned 6,000 vehicles were shipped by the third quarter, causing earnings in the division to fall 20% below target. This shortfall weighed on the company's overall earnings per share (EPS), which came in at $4.80—well below the expected $6.20. Meanwhile, the Access Equipment and Vocational segments grew strongly, rising 15% and 12% respectively.
The company's fourth-quarter revenue increased by over 3%, driven mainly by the Access Equipment business. However, gross margins dropped by 140 basis points to 15.8%, and adjusted operating income fell 8%, missing expectations by 2%. Margins also shrank to 8.4%, down 100 basis points from earlier levels.
Looking ahead, Oshkosh expects non-residential construction spending to dip by around 1% in 2025, with weak starts continuing. But the company forecasts a return to growth in 2026, which should benefit its construction-related businesses. For fiscal year 2026, Oshkosh guided revenue at $11 billion—slightly below earlier analyst estimates—along with lower margins and free cash flow projections.
Despite these challenges, order growth remained positive across all segments, with a 5% overall increase and rising backlogs in Access and Vocational divisions. Analysts project mid-single-digit revenue growth in 2026, accelerating to around 5% over the next three years before settling at 4% long-term. Some also argue the stock remains undervalued, with potential for another 15%-20% upside from current levels. A discounted cash flow analysis even suggests over 10% annualised total return potential.
Since 2025, Oshkosh's stock performance has mirrored the broader industrial sector, underperforming Caterpillar (CAT) but outperforming Terex (TEX) and United Rentals (URI). The company may now focus more on diversifying its defence contracts internationally and expanding into electrification to reduce reliance on the USPS programme.
Oshkosh faces near-term pressure from delayed USPS deliveries and weaker margins, but its Access and Vocational segments continue to grow. With a forecasted recovery in non-residential construction by 2026 and steady order growth, the company aims for gradual revenue increases. Analysts still see room for stock gains, though execution risks remain.
