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

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Navient Corporation (NAVI - Free Report) is scheduled to report second-quarter 2022 results on Jul 26, after market close. The company’s earnings and revenues are expected to display year-over-year declines.

This Wilmington, DE-based lender’s first-quarter 2022 earnings outpaced the Zacks Consensus Estimate primarily due to a fall in expenses, partially offset by a fall in net interest income (“NII”) and non-interest income. A rise in provisions was another headwind.

NAVI has a decent earnings surprise history. Navient’s earnings outpaced estimates in three of the trailing four quarters, missing the mark once. The negative earnings surprise was 28.6%.

Navient Corporation Price and EPS Surprise

 

Navient Corporation Price and EPS Surprise

Navient Corporation price-eps-surprise | Navient Corporation Quote

NAVI’s activities in the to-be-reported quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of 79 cents has moved 3.7% downward in the past week. The figure indicates a 16% plunge from the year-ago quarter’s reported figure.

Key Factors to Note

Loans: The lending environment was decent in the quarter under review. Per the Fed’s latest data, the consumer lending scenario was strong in the quarter. As the economy recovers and schools return to on-campus operations from remote, the company is expected to have continued to see student loan growth acceleration, thereby driving Navient’s overall loan balances.

NII: Despite rate hikes, notable pay downs of the non-refinance loan portfolio were headwinds. This is likely to have affected Navient’s NII and net interest margin. The consensus estimate for NII for the second quarter is pegged at $263 million, suggesting a sequential decline of 22%.

Non-Interest Income: Weakness in fee income is expected to have kept Navient’s top line under pressure in the to-be-reported quarter. The pandemic-related contract expirations and lower vaccine administration services are expected to have continued to abate and reduce revenues in the Business Processing segment.

The consensus estimate for servicing revenues is pegged at $18 million, unchanged from the prior quarter’s reported figure. Also, the consensus mark for asset recovery and business processing revenues suggests a sequential fall of 12.4% to $85 million.

With this, the Zacks Consensus Estimate of $108 million for total fee income indicates a decline of 52% from the prior quarter.

Expenses: Navient’s initiatives to become a technologically-advanced company and its aim to expand services outside the education industry are expected to have led to elevated expenses, thereby affecting bottom-line growth.

Here is What Our Quantitative Model Predicts:

Our proven model does not conclusively predict an earnings beat for Navient this time around. This is because NAVI does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

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

Earnings ESP: Earnings ESP for Navient is -5.06%.

Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks That Warrant a Look

Here are a few finance 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:

The Earnings ESP for Regions Financial (RF - Free Report) is +0.89% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2022 results on Jul 22.

Over the past week, the Zacks Consensus Estimate for RF’s quarterly earnings has been revised 1.9% lower.

The Earnings ESP for Sallie Mae (SLM - Free Report) is +13.23% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2022 results on Jul 27.

Over the past week, the Zacks Consensus Estimate for RF’s quarterly earnings has been revised 3.8% upward.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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