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

Core Insights - Oshkosh Corporation is enhancing its Defense unit with new contracts from the U.S. Department of Defense, including a $53 million order for Common Bridge Transporters and an $89 million order for Palletized Load System A2 vehicles [1] Group 1: Defense Unit Performance - The Defense unit is experiencing growth through significant contract wins, which are crucial for the company's overall performance [1] - The company is integrating advanced technologies such as artificial intelligence to improve operational efficiency and decision-making [2][3] Group 2: Financial Outlook and Backlog - Oshkosh's consolidated backlog decreased to $13.7 billion at the end of September 2025 from $14.3 billion a year earlier, indicating a decline in future sales commitments [4][10] - The Access unit is showing signs of moderation, with a book-to-bill ratio of 0.6 and a 19% year-over-year revenue decline, as customers become cautious with capital expenditures [5][10] - The company has revised its 2025 revenue outlook to between $10.3 billion and $10.4 billion, down from a previous estimate of $10.6 billion to $10.75 billion, reflecting softer demand [6][10] Group 3: Strategic Challenges - Despite advancements in the Defense unit and AI technologies, these strengths are insufficient to counterbalance operational and macroeconomic challenges [7][9] - The decline in backlog and softer orders in the Access Equipment segment highlight the impact of tariff uncertainties and a mixed macro environment on customer spending [8][9]