A month has gone by since the last earnings report for Navigant . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Navigant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Third Quarter 2018 Results
Navigant reported strong third-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share (from continuing operations) of 15 cents beat the consensus mark by 4 cents and came ahead of the year-ago figure by a penny. The bottom line in the reported quarter benefited from lower net interest cost and lower share count.
Total revenues of $187.62 million increased 1.1% from the prior-year quarter. Revenues before reimbursements (RBR) of $171.39 million beat the consensus estimate by 2.1 million and improved 4.2% year over year. The top line benefitted from robust performance of the company’s Energy segment, solid demand in Financial Services Advisory and Compliance (FSAC) segment and contribution from the start of the Health System Solutions (HSS) joint-venture with Baptist Health South Florida.
Revenues by Segment
Energy segment RBR increased 16.9% year over year to $34.6 millionon the back of strong demand across the segment.
FSAC RBR increased 1.2% year over year to $35 million. Solid demand across specialties such as financial crime and operational efficiency engagements drove segmental revenues.
Healthcare segment’s RBR increased 1.5% from the prior-year quarter to $101.8 million, driven by the start of the HSS joint venture with Baptist Health South Florida, which more than offset some softness in Healthcare consulting.
EBITDA Performance
Adjusted EBITDA from continuing operations in the third quarter came in at $17.5 million compared with $18.5 million in the prior-year quarter. The decline was due to higher costs associated with the maintenance of resources in Healthcare consulting and headcount and technology investments in the FSAC segment.
Balance Sheet and Cash Flow
Navigant exited third-quarter 2018 with cash and cash equivalents of $277.43 million compared with $11.14 million at the end of the prior quarter. Bank debt was repaid in full as of Sep 30, 2018.
The company generated $24.69 million of net cash from operating activities in the reported quarter. Free cash flow was $30.72 million.
Share Repurchase & Dividend Payments
Navigant expanded its share repurchase program and repurchased 1.54 million additional shares during the third quarter of 2018 at an aggregate cost of $36.6 million and an average price of $23.76 per share. As of Sep 30, 2018, the company had $135.4 million available under its expanded share repurchase authorization.
Concurrent with the earnings release, Navigant initiated its first-ever quarterly dividend. The company’s board of directors declared a quarterly cash dividend of 5 cents per share, payable on Dec14, 2018 to shareholders of record on Nov 30, 2018. In the reported quarter, the company paid dividend worth $2.22 million.
2018 Guidance
Navigant reaffirmed its 2018 guidance for continuing operations. It expects revenues to be in the range of $740-$765 million. RBR is expected to be between $660 million and $685 million. Adjusted earnings per share are expected to be between 40 cents and 50 cents. Adjusted EBITDA is anticipated in the $52-$59 million band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5% due to these changes.
VGM Scores
At this time, Navigant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Navigant has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Navigant (NCI) Up 2.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Navigant . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Navigant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Third Quarter 2018 Results
Navigant reported strong third-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share (from continuing operations) of 15 cents beat the consensus mark by 4 cents and came ahead of the year-ago figure by a penny. The bottom line in the reported quarter benefited from lower net interest cost and lower share count.
Total revenues of $187.62 million increased 1.1% from the prior-year quarter. Revenues before reimbursements (RBR) of $171.39 million beat the consensus estimate by 2.1 million and improved 4.2% year over year. The top line benefitted from robust performance of the company’s Energy segment, solid demand in Financial Services Advisory and Compliance (FSAC) segment and contribution from the start of the Health System Solutions (HSS) joint-venture with Baptist Health South Florida.
Revenues by Segment
Energy segment RBR increased 16.9% year over year to $34.6 millionon the back of strong demand across the segment.
FSAC RBR increased 1.2% year over year to $35 million. Solid demand across specialties such as financial crime and operational efficiency engagements drove segmental revenues.
Healthcare segment’s RBR increased 1.5% from the prior-year quarter to $101.8 million, driven by the start of the HSS joint venture with Baptist Health South Florida, which more than offset some softness in Healthcare consulting.
EBITDA Performance
Adjusted EBITDA from continuing operations in the third quarter came in at $17.5 million compared with $18.5 million in the prior-year quarter. The decline was due to higher costs associated with the maintenance of resources in Healthcare consulting and headcount and technology investments in the FSAC segment.
Balance Sheet and Cash Flow
Navigant exited third-quarter 2018 with cash and cash equivalents of $277.43 million compared with $11.14 million at the end of the prior quarter. Bank debt was repaid in full as of Sep 30, 2018.
The company generated $24.69 million of net cash from operating activities in the reported quarter. Free cash flow was $30.72 million.
Share Repurchase & Dividend Payments
Navigant expanded its share repurchase program and repurchased 1.54 million additional shares during the third quarter of 2018 at an aggregate cost of $36.6 million and an average price of $23.76 per share. As of Sep 30, 2018, the company had $135.4 million available under its expanded share repurchase authorization.
Concurrent with the earnings release, Navigant initiated its first-ever quarterly dividend. The company’s board of directors declared a quarterly cash dividend of 5 cents per share, payable on Dec14, 2018 to shareholders of record on Nov 30, 2018. In the reported quarter, the company paid dividend worth $2.22 million.
2018 Guidance
Navigant reaffirmed its 2018 guidance for continuing operations. It expects revenues to be in the range of $740-$765 million. RBR is expected to be between $660 million and $685 million. Adjusted earnings per share are expected to be between 40 cents and 50 cents. Adjusted EBITDA is anticipated in the $52-$59 million band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5% due to these changes.
VGM Scores
At this time, Navigant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Navigant has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.