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Why Is Navistar (NAV) Down 0.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Navistar (NAV - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Navistar due for a breakout? 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.

Navistar Posts Mixed Q4 Results

Navistar reported fourth-quarter fiscal 2020 adjusted earnings of 62 cents per share, surpassing the Zacks Consensus Estimate of 23 cents. The bottom line, however, deteriorated from the year-ago profit of $1.14 per share amid lower year-over-year revenues due to the coronavirus pandemic. The truck maker registered revenues of $2,065 million for the October-end quarter, missing the Zacks Consensus Estimate of $2,090 million. Moreover, the top line marked a 25.7% year-over-year plunge due to coronavirus-led lower demand in core markets.

Segmental Performance

The Truck segment’s total net sales came in at $1,478 million for the reported quarter, plummeting 30% year over year. The segment witnessed a net loss of $10 million against profit of $86 million reported in the year-ago quarter. This was due to lower volumes on weaker industry conditions resulting from the pandemic.

The Parts segment net sales dropped 9.3% from the year-ago quarter to $496 million. The segment’s profit was $129 million, down 19.8% on a year-over-year basis. The segment’s results were impacted by lower volumes in the United States and Canada.

Net sales in the company’s Global Operations summed $87 million, down from $93 million recorded in the year-ago quarter. Unfavorable forex translations and depressed volumes from South American operations amid temporary production halts due to the coronavirus crisis resulted in this downside. The segment reported a profit of $12 million, turning around from the year-ago quarter’s loss of $10 million that stemmed from a restructuring charge. 

Net sales in Navistar’s Financial Services segment came in at $47 million, reflecting a 34% decrease from the year-ago quarter. The segment recorded a profit of $14 million compared with the year-ago quarter’s $30 million. This deterioration resulted from lower average finance receivables due to dismal volumes and reduction in finance fees on lower interest rates.

Financial Position

The Illinois-based trucking giant had cash and cash equivalents of $1,843 million as of Oct 31, 2020, higher than $1,370 million on Oct 31, 2019. At fiscal fourth quarter-end, long-term debt was $4,690 million, up from $4,317 million as of Oct 31, 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 33.33% due to these changes.

VGM Scores

Currently, Navistar has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 looks promising. It's no surprise Navistar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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