Oshkosh Corporation: A Misunderstood Industrial Powerhouse Poised for 2025–2028 Growth

In the shadow of more hyped tech darlings, Oshkosh Corporation has quietly transformed itself into a formidable industrial player with a compelling long-term story. While its stock trades at a 12% discount to its 12-month average price target, the company's strategic repositioning, robust backlog, and margin-expansion initiatives suggest it is being misunderstood by the market. For investors with a multi-year horizon, Oshkosh offers a rare blend of defensive resilience and offensive growth potential.

Strategic Transformation: From Defense to Transport

Oshkosh's recent rebranding of its Defense segment to the Transport segment is more than a name change—it reflects a calculated pivot to integrate commercial and defense applications under a unified umbrella. This move underscores the company's recognition of overlapping technological needs in both sectors, particularly in electrification, autonomy, and AI-driven logistics. By leveraging its expertise in mission-critical vehicles (e.g., the JLG aerial work platforms and Oshkosh Defense's MRAPs), the company is now targeting a broader addressable market.

The acquisition of AeroTech in 2023 and Eatron Technologies in 2024 further illustrates Oshkosh's commitment to innovation. These moves have not only expanded its air transportation capabilities but also fortified its battery management and autonomy expertise. The result? A diversified portfolio that spans fire apparatus, refuse vehicles, airport equipment, and defense platforms—all of which are now primed for electrification and digital transformation.

Undervaluation: A Mispricing of Patience

Oshkosh's current valuation appears to understate its long-term potential. At a forward P/E ratio of 10.5x (as of August 2025), the stock trades at a significant discount to its historical average of 14x and to peers in the industrial sector. This undervaluation stems partly from short-term concerns about macroeconomic volatility and the cyclical nature of its markets. However, Oshkosh's $14.6 billion backlog—with half of its 2028 revenue growth already secured via multi-year contracts—provides a stable runway for earnings.

The company's recent Q2 2025 results further validate its operational discipline. Despite a 4% revenue decline, adjusted net income surged 24.7% to $3.41 per share, driven by margin expansion in the Vocational segment. This performance highlights Oshkosh's ability to navigate headwinds through cost controls and pricing power—a trait that is often overlooked in its valuation.

Long-Term Catalysts: Defense Contracts, Electrification, and Margin Expansion

Oshkosh's 2025–2028 growth is anchored by three pillars:
1. Defense and Government Contracts: The $7.5 billion U.S. Postal Service Next Generation Delivery Vehicle (NGDV) contract is a cornerstone of the Transport segment's growth. With production ramping up, this program alone could contribute $1.5 billion annually by 2028. Additionally, new economic price adjustment provisions in defense contracts are set to improve margins by 2–3 percentage points.
2. Electrification: Oshkosh's Volterra ZSL and E313 electric telehandler models are not just green initiatives—they are revenue drivers. The company's 100-unit order for electric refuse trucks from Republic Services signals growing demand for sustainable solutions, a trend that is expected to accelerate as cities adopt zero-emission mandates.
3. Margin Expansion: Through AI-driven manufacturing and autonomous technologies, Oshkosh is reducing costs while improving throughput. Its 10.7% operating margin in Q2 2025, achieved despite a revenue dip, demonstrates the effectiveness of these initiatives. By 2028, the company aims to expand its adjusted operating margin to 12–14%, a 200–400 basis point improvement from current levels.

Capital Allocation and Shareholder Returns

Oshkosh's disciplined capital management is another underappreciated strength. With $9.9 million in share repurchase authorization remaining as of March 2025, the company has the firepower to boost EPS through buybacks. In Q2, it repurchased 414,755 shares for $40 million, lifting EPS by $0.06. This focus on returning capital, combined with a 2.5% dividend yield, makes Oshkosh an attractive option for income-focused investors.

Risks and Considerations

While Oshkosh's trajectory is compelling, investors should remain mindful of potential headwinds. Supply chain disruptions and inflationary pressures could delay production timelines, particularly for the NGDV program. Additionally, the company's reliance on government contracts introduces political risk, though its diversified portfolio mitigates this to some extent.

Investment Thesis

Oshkosh Corporation is a textbook example of a company being undervalued due to short-term noise. Its strategic transformation, robust backlog, and margin-expansion initiatives position it to deliver 7–10% annual revenue growth and 200–400 basis points of margin expansion through 2028. For investors seeking exposure to the industrial renaissance—driven by decarbonization, AI, and defense spending—Oshkosh offers a compelling entry point.

Actionable Advice: Buy Oshkosh shares at current levels, with a target of $129.99 (12-month analyst average) and a stop-loss at $105. Reinvest dividends to compound returns, and monitor the NGDV production ramp and electrification adoption rates as key catalysts.

In a market obsessed with short-term volatility, Oshkosh's long-term vision and operational execution make it a standout industrial play. The question is not whether it can grow—it's whether the market will recognize its potential before the 2028 targets become reality.