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Navient (NAVI) to Report Q4 Earnings: What's in the Cards?

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Navient Corporation (NAVI - Free Report) is scheduled to report fourth-quarter 2018 results on Jan 22, after the market closes. Though revenues are expected to decline on a year-over-year basis, earnings are likely to record an upswing.

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

Further, the company has an impressive surprise history. Navient outpaced earnings estimates in three of the trailing four quarters, the average positive surprise being 2%.
 

However, activities of the company during the quarter under review were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 48 cents remained unchanged over the last seven days. Nevertheless, the figure reflects a year-over-year improvement of 11.6%.

In addition, the Zacks Consensus Estimate for sales of $315.7 million represents 13.8% decline year over year.

For the three-month period ended Dec 31, 2018, shares of Navient have lost 35.1% compared with 22.4% decline recorded by the industry it belongs to.

Will the price performance improve post fourth-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 fourth quarter. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and 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.

Factors to Influence Q4 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 Oct-Dec quarter, Navient is likely to report an increase in overall loan balances.

Elevated 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, will likely result in elevated expenses.

Stocks That Warrant a Look

Here are some other stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

Ares Capital Corporation (ARCC - Free Report) is slated to release results on Feb 12. The company has an Earnings ESP of +1.10% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Huntington Bancshares Incorporated (HBAN - Free Report) is +3.97% and it also carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jan 24.

BOK Financial Corporation (BOKF - Free Report) has an Earnings ESP of +2.54% and holds a Zacks Rank of 3. It is slated to report December quarter-end results on Jan 30.

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