Back to top

Analyst Blog

Standard & Poor’s (S&P) Ratings Services has downgraded Navistar International Corporation’s (NAV - Analyst Report) long-term credit rating to “B-” from “B” and maintained a negative outlook. Dismal second quarter performance primarily led to the decline.

S&P also changed Navistar’s business risk profile to “vulnerable” from “weak”. S&P is cautious about the liquidity of the company and expects that Navistar will generate wider losses in future. Shares of Navistar had dropped around 9.1% after the company announced its fiscal 2013 second quarter earnings on Jun 11, 2013.

Navistar’s second quarter (ended Apr 30, 2013) loss widened to $353 million or $4.39 per share compared with $137 million or $1.99 per share (excluding special items) in the year-ago quarter. Reported loss was also significantly wider than the Zacks Consensus Estimate of a loss of $1.09 per share.

Lower sales volumes and higher pre-existing warranty adjustments related to EPA 2010 emissions level engines primarily dragged down the profits. However, this was partially offset by lower SG&A expenses and decrease in engineering and product development costs.

Revenues declined 22.5% year over year to $2.5 billion in the quarter, missing the Zacks Consensus Estimate of $2.9 billion. The year-over-year decrease in revenues was due to a 14% decline in industry demand and lower market share of the company due to its transition to clean engine systems as per EPA regulation. This was partially offset by higher sales volumes in the South America engine business.

Navistar had cash and cash equivalents of $505.0 million as of Apr 30, 2013, compared with $1.1 billion as of Oct 31, 2012. Total debt was flat at $4.8 billion as of Apr 30, 2013 compared with the same as of Oct 31, 2012.

Warrenville, Ill-based truck manufacturer currently retains a Zacks Rank #4 (Sell). Some stocks that are performing well in the industry in which Navistar operates include Visteon Corp. (VC - Snapshot Report), STRATTEC Security Corporation (STRT - Snapshot Report) and Magna International Inc. (MGA - Analyst Report). All these companies carry a Zacks Rank #1 (Strong Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%