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What's in the Cards for Navient (NAVI) in Q3 Earnings?

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Navient Corporation (NAVI - Free Report) is scheduled to report third-quarter 2018 results on Oct 23, after the market closes. Its earnings and revenues are expected to decline year over year.

This Wilmington, DE-based lender’s second-quarter 2018 earnings surpassed the Zacks Consensus Estimate primarily due to lower provisions. However, lower revenues and escalated expenses acted as headwinds.

Moreover, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average positive surprise of 3%.

Navient Corporation Price and EPS Surprise
 

Navient Corporation Price and EPS Surprise | Navient Corporation Quote

 

However, activities of the company during the third quarter were inadequate to win analysts’ confidence. As a result, its Zacks Consensus Estimate for earnings of 50 cents decreased nearly 2% over the past 30 days. Moreover, the figure reflects a year-over-year decline of 9.1%.

Further, the Zacks Consensus Estimate for sales of $328.3 million represents 7.5% decline year over year.

So far this year, shares of Navient have lost 5.6% compared with 9.9% decline recorded by the industry it belongs to.

Will the price performance improve post third-quarter earnings release? To a great extent, it depends on whether the company will be able to beat earnings estimates this time around.

According to our quantitative model, it cannot be conclusively predicted whether Navient will be able to beat the Zacks Consensus Estimate in the third quarter. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Navient is 0.00%.

Zacks Rank: Navient currently carries a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.

Now let’s take a look at the factors that might impact Q3 results:

Easing Margin Pressure: Navient’s prime-indexed assets lag the rise in short-term rates by a quarter. As a result, pressure on net interest margin will likely ease and support its top line.

Loans Might increase: Given the rise in student loans during the Jul-Sep quarter, Navient is likely to report an increase in overall loan balances.

Increased Expenses From Investment in Technology: Navient’s efforts to become a technologically advanced company, along with its aim to expand services outside the educational industry, is likely to result in elevated expenses.

Stocks That Warrant a Look

Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

Regions Financial Corporation (RF - Free Report) has an Earnings ESP of +0.40% and a Zacks Rank of 3. The company is slated to release results on Oct 23.

SVB Financial Group is slated to release results on Oct 25. It has an Earnings ESP of +1.22% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

T. Rowe Price Group, Inc. (TROW - Free Report) is also scheduled to release results on Oct 25. It has an Earnings ESP of +0.78% and a Zacks Rank #2 (Buy).

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