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Navient (NAVI) Stock Rallies 5% as Q1 Earnings Beat Estimates
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Shares of Navient Corporation (NAVI - Free Report) gained 5% during the after-market trading session after the company reported solid first-quarter 2021 results. Adjusted core earnings per share came in at $1.71, which surpassed the Zacks Consensus Estimate of 78 cents. Also, the bottom line is substantially above the year-ago quarter figure of 51 cents.
Core earnings exclude the impacts of certain other one-time items, including mark-to-market gains/losses on derivatives, along with goodwill and acquired intangible asset amortization, and impairment.
Results were supported by a rise in non interest income and provision benefit. However, fall in net interest income (NII) and higher expenses are concerns. Further, private education loans declined during the quarter. GAAP net income was $370 million or $2.00 per share against the net loss of $106 million or 53 cents per share seen in the prior year.
NII Decreases, Provisions Fall (on Core Earnings Basis)
NII decreased marginally year over year to $295 million.
Non-interest income jumped 60.6% to $281 million. This rise is mainly attributable to higher asset recovery and business processing revenues, and gains on sales of loans.
Provision for loan losses was a benefit of $87 million as against the provision of $5million seen in the prior-year quarter.
Total expenses climbed 3.5% to $265 million. Higher operating expenses and rise in restructuring/other reorganization expenses mainly led to this upswing.
Segment Performance
Federal Education Loans: The segment generated core earnings of $112 million, down 5.9% year over year. Lower revenues were partly offset by a fall in expenses.
As of Mar 31, 2021, the company’s FFELP loans were $56.9 billion, down 2.4% sequentially.
Consumer Lending: The segment reported core earnings of $234 million, which increased significantly from the year-ago quarter’s $54 million. Provision benefits and growth in revenues supported the segment. Net interest margin was 2.99%, shrinking 32 basis points.
Private education loan delinquencies of 30 days or more of $460 million were down 40.2% from the prior-year quarter.
As of Mar 31, 2021, the company’s private education loans totaled $19.7 billion, down 6.3% from the prior quarter. Also, Navient originated $1.7 billion of private education refinance loans during the reported quarter.
Business Processing: The segment reported core earnings of $26 million, up significantly from the $2 million recorded in the year-ago quarter. Higher fee revenues led to this upside.
Source of Funding and Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, issuance of additional unsecured debt, repayment of principal on unencumbered student-loan assets, and distributions from securitization trusts (including servicing fees). It might also issue term asset-backed securities (ABS).
During the reported quarter, Navient issued $2.8 billion in term ABS and $500 million in unsecured debt. Notably, it had $1.5 billion of cash as of Mar 31, 2021.
Capital-Deployment Activities
In the first quarter, the company paid out $29 million in common stock dividends.
During the quarter, Navient repurchased 8.2 million shares of common stock for $100 million. As of Mar 31, 2021, $500 million of share-repurchase authority remained.
Our Take
Navient’s performance during the first quarter was decent. Reserve releases came as tailwind. However, its involvement in improper lending practices is likely to keep legal expenses elevated.
Navient Corporation Price, Consensus and EPS Surprise
BancorpSouth Bank delivered an earnings surprise of 14.1% in first-quarter 2021 on higher interest income. Net operating earnings of 73 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, the bottom line compared favorably with the 33 cents reported in the year-ago quarter.
People's United Financial Inc. reported first-quarter operating earnings of 37 cents per share, which surpassed the Zacks Consensus Estimate of 34 cents. Also, the bottom line came in above the year-ago quarter’s reported figure of 33 cents.
Bank of Hawaii Corporation (BOH - Free Report) recorded first-quarter 2021 earnings per share of $1.50, outpacing the Zacks Consensus Estimate of $1.18. Also, the bottom line compared favorably with 87 cents reported in the prior-year quarter.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Navient (NAVI) Stock Rallies 5% as Q1 Earnings Beat Estimates
Shares of Navient Corporation (NAVI - Free Report) gained 5% during the after-market trading session after the company reported solid first-quarter 2021 results. Adjusted core earnings per share came in at $1.71, which surpassed the Zacks Consensus Estimate of 78 cents. Also, the bottom line is substantially above the year-ago quarter figure of 51 cents.
Core earnings exclude the impacts of certain other one-time items, including mark-to-market gains/losses on derivatives, along with goodwill and acquired intangible asset amortization, and impairment.
Results were supported by a rise in non interest income and provision benefit. However, fall in net interest income (NII) and higher expenses are concerns. Further, private education loans declined during the quarter.
GAAP net income was $370 million or $2.00 per share against the net loss of $106 million or 53 cents per share seen in the prior year.
NII Decreases, Provisions Fall (on Core Earnings Basis)
NII decreased marginally year over year to $295 million.
Non-interest income jumped 60.6% to $281 million. This rise is mainly attributable to higher asset recovery and business processing revenues, and gains on sales of loans.
Provision for loan losses was a benefit of $87 million as against the provision of $5million seen in the prior-year quarter.
Total expenses climbed 3.5% to $265 million. Higher operating expenses and rise in restructuring/other reorganization expenses mainly led to this upswing.
Segment Performance
Federal Education Loans: The segment generated core earnings of $112 million, down 5.9% year over year. Lower revenues were partly offset by a fall in expenses.
As of Mar 31, 2021, the company’s FFELP loans were $56.9 billion, down 2.4% sequentially.
Consumer Lending: The segment reported core earnings of $234 million, which increased significantly from the year-ago quarter’s $54 million. Provision benefits and growth in revenues supported the segment. Net interest margin was 2.99%, shrinking 32 basis points.
Private education loan delinquencies of 30 days or more of $460 million were down 40.2% from the prior-year quarter.
As of Mar 31, 2021, the company’s private education loans totaled $19.7 billion, down 6.3% from the prior quarter. Also, Navient originated $1.7 billion of private education refinance loans during the reported quarter.
Business Processing: The segment reported core earnings of $26 million, up significantly from the $2 million recorded in the year-ago quarter. Higher fee revenues led to this upside.
Source of Funding and Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, issuance of additional unsecured debt, repayment of principal on unencumbered student-loan assets, and distributions from securitization trusts (including servicing fees). It might also issue term asset-backed securities (ABS).
During the reported quarter, Navient issued $2.8 billion in term ABS and $500 million in unsecured debt. Notably, it had $1.5 billion of cash as of Mar 31, 2021.
Capital-Deployment Activities
In the first quarter, the company paid out $29 million in common stock dividends.
During the quarter, Navient repurchased 8.2 million shares of common stock for $100 million. As of Mar 31, 2021, $500 million of share-repurchase authority remained.
Our Take
Navient’s performance during the first quarter was decent. Reserve releases came as tailwind. However, its involvement in improper lending practices is likely to keep legal expenses elevated.
Navient Corporation Price, Consensus and EPS Surprise
Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote
Currently, Navient currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Finance Stocks
BancorpSouth Bank delivered an earnings surprise of 14.1% in first-quarter 2021 on higher interest income. Net operating earnings of 73 cents per share beat the Zacks Consensus Estimate of 64 cents. Also, the bottom line compared favorably with the 33 cents reported in the year-ago quarter.
People's United Financial Inc. reported first-quarter operating earnings of 37 cents per share, which surpassed the Zacks Consensus Estimate of 34 cents. Also, the bottom line came in above the year-ago quarter’s reported figure of 33 cents.
Bank of Hawaii Corporation (BOH - Free Report) recorded first-quarter 2021 earnings per share of $1.50, outpacing the Zacks Consensus Estimate of $1.18. Also, the bottom line compared favorably with 87 cents reported in the prior-year quarter.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>