Oshkosh CorporationOSK

Oshkosh' prowess helped the firm beat incumbent BAE Systems for the government's FMTV contract. Although the initial order is under $300 million, the contract could be worth almost $3 billion during the next decade.

Despite its unsuccessful MRAP attempt, Oshkosh was victorious in the government's M-ATV contract, giving the firm a guaranteed $1.06 billion in revenue over the next two years. If the most optimistic contract assumptions come to fruition, the contract could be worth $12 billion, creating a massive boon for Oshkosh.

In 2006, Oshkosh won a $740 million contract with the DoD that extends over a six-year period commencing in 2007, which should provide modest revenue growth over this span.

Oshkosh's relationship with the U.S. military dates back more than 80 years, helping the firm establish itself as a proven supplier. This relationship should bode well for future contract wins. Read more 

Capacity constraints could force Oshkosh to outsource some its manufacturing for the M-ATV victory to its closet competitors. Although the work would likely be non-value-added, it still limits Oshkosh's potential rewards.

Upset with the FMTV outcome, rivals BAE Systems and Navistar NAV have both filed formal protests over the US Army's decision. In the worst-case scenario, we believe that the Government Accountability Office could recommend awarding the contract to either competitor, causing Oshkosh to lose all future revenue.

The access segment (JLG) is heavily exposed to U.S. residential construction spending, which is expected to continue to be weak in the near term.

Through the first three quarters of fiscal year 2009, JLG's revenue is down 65% from the previous year, further evidence that Oshkosh severely overpaid for the business. Read more