Why OSK's Defense Strength and AI Push Aren't Enough to Buy Now

Oshkosh Corporation OSK, a manufacturer of custom-built vehicles and equipment, is strengthening its Defense unit with new contract wins from the U.S. Department of Defense.  It recently secured a $53 million order from the U.S. Army Contracting Command-Detroit Arsenal for Common Bridge Transporters under the Family of Heavy Tactical Vehicle (FHTV) V program. In October, the U.S. ACC-DT awarded an $89 million order for Palletized Load System A2 vehicles, kits and installations under the FHTV V contract.

The company is also leveraging artificial intelligence to drive data-informed decision-making and improve operational efficiency through intelligent analytics, computer vision and predictive systems.

It has developed advanced technologies that are shaping the future of job sites, neighborhoods and airports by integrating autonomy, artificial intelligence, connectivity and electrification. These solutions are designed to support a wide range of users, including firefighters, airport ground crews, mail carriers, soldiers and construction workers.

Do These Advances Meaningfully Counter the Mounting Headwinds?

At the end of Sept. 2025, Oshkosh’s consolidated backlog fell to $13.7 billion (approximately $721 million in Access Equipment, $6.4 billion in Vocational and $6.74 billion in Transport) compared with $14.3 billion in the year-ago period. Declining backlog, which indicates a drop in future sales commitments, is concerning.

Access unit is showing early signs of moderation as customers become more cautious with near-term capex. Although underlying utilization and used equipment trends remain healthy, orders have softened, reflected in a typical but lower book-to-bill of 0.6 and a 19% year-over-year decline in segment revenues. Tariffs and the broader macro environment are causing customers, across both independents and national rental companies, to slow the pace of new equipment intake. With discounting rising modestly to 3-4% and demand softer than last year, Oshkosh may face a more measured order cadence heading into 2026 as buyers await greater clarity.

Trimmed outlook is another cause of concern. Oshkosh expects 2025 revenues to decline year over year. It expects consolidated 2025 sales between $10.3 billion and $10.4 billion, down from the prior estimate of $10.6-$10.75 billion reported in 2024. The revised guide reflects softer demand in key areas, especially the Access and Transport segments, where customers have become more cautious with equipment purchases. Tariff uncertainty and a mixed macro backdrop are also weighing on orders. The company now expects its 2025 adjusted earnings per share to be between $10.50 and $11, compared with the previous guidance of $11.

Conclusion

Despite meaningful momentum in its Defense unit and growing use of AI-driven technologies, Oshkosh’s strategic strengths are not enough to offset the mounting operational and macroeconomic headwinds. 

Defense contract wins remain insufficient to counterbalance weakness across larger, more cyclical segments. Declining consolidated backlog signals slowing future demand, particularly in Access Equipment, where customers are deferring capital expenditures amid tariff uncertainty and a mixed macro environment. Softer orders, lower book-to-bill, rising discounting and a year-over-year revenue decline underscore this pressure. 

At the same time, AI and advanced technology initiatives, though strategically valuable, are longer-term differentiators and do not yet materially move near-term financial performance. With a trimmed 2025 revenue and earnings outlook, the company’s near-term risk profile remains elevated and limits the ability of Defense strength and AI leverage to fully offset broader demand-driven challenges. OSK carries a Zacks Rank #4 (Sell) at present.

Stocks to Consider

Some better-ranked stocks in the auto space are General Motors Company GM, The Goodyear Tire & Rubber Company GT and PHINIA Inc. PHIN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GM’s 2025 EPS has improved 2 cents in the past 30 days. The Zacks Consensus Estimate for 2026 EPS has improved 7 cents in the past seven days.

The consensus estimate for GT’s 2025 EPS has improved 19 cents in the past 90 days, while the same for 2026 has moved down 13 cents.

The Zacks Consensus Estimate for PHIN’s 2025 sales and earnings implies year-over-year growth of 1.1% and 33.4%, respectively. EPS estimates for 2025 and 2026 have improved 45 cents and 81 cents, respectively, in the past 30 days. 

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This article originally published on Zacks Investment Research (zacks.com).

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