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What is in the Offing for Navient (NAVI) in Q3 Earnings?
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Navient Corporation (NAVI - Free Report) is scheduled to report third-quarter 2022 results on Oct 25, after market close. The company’s earnings and revenues are expected to display year-over-year declines.
This Wilmington, DE-based lender’s second-quarter 2022 earnings outpaced the Zacks Consensus Estimate primarily due to a fall in expenses, partially offset by declines 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 27.1%.
NAVI’s activities in the to-be-reported quarter were adequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for third-quarter earnings of 78 cents has moved marginally upward in the past month. The figure indicates a 12.4% plunge from the year-ago quarter’s reported figure.
Key Factors to Note
Per the Fed’s latest data, while there was consumer loan growth, the pace of increase decelerated in the third quarter. Also, the government announced its debt relief program and extended payment moratoriums through December 2022. The moratorium extension has created uncertainty in origination volumes and lowered the demand for refinance loans for student lenders like NAVI. This is expected to have affected the company’s NII in the third quarter.
The consensus estimate for NII for the third quarter is pegged at $291.9 million, suggesting a year-over-year decline 2.4%.
The increasing interest rate environment (a 150-basis-point increase in the third quarter) is anticipated to have affected its net interest margin in the Federal Education Loans and Consumer Lending segments.
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 are expected to have continued to affect revenues in the Business Processing segment.
The consensus estimate for servicing revenues is pegged at $17 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 6.8% to $82 million.
With this, the Zacks Consensus Estimate of $104 million for total fee income indicates a decline of 22.4% from the prior quarter’s reported figure.
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, affecting bottom-line growth.
Nonetheless, NAVI earlier announced plans to repurchase $400 million of its common stock in the ongoing year. As of the second-quarter end, the company had $180 million of its targeted amount remaining to be repurchased through 2022 end. Hence, we expect the company to have continued its repurchase activities in the quarter under review.
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 +2.56%.
Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell).
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 Civista Bancshares (CIVB - Free Report) is +5.88% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report third-quarter 2022 results on Oct 27.
Over the past week, the Zacks Consensus Estimate for CIVB’s quarterly earnings has been revised marginally upward.
The Earnings ESP for QCR Holdings (QCRH - Free Report) is +5.71% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2022 results on Oct 26.
Over the past month, the Zacks Consensus Estimate for QCRH’s quarterly earnings has been unrevised.
Image: Bigstock
What is in the Offing for Navient (NAVI) in Q3 Earnings?
Navient Corporation (NAVI - Free Report) is scheduled to report third-quarter 2022 results on Oct 25, after market close. The company’s earnings and revenues are expected to display year-over-year declines.
This Wilmington, DE-based lender’s second-quarter 2022 earnings outpaced the Zacks Consensus Estimate primarily due to a fall in expenses, partially offset by declines 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 27.1%.
Navient Corporation Price and EPS Surprise
Navient Corporation price-eps-surprise | Navient Corporation Quote
NAVI’s activities in the to-be-reported quarter were adequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for third-quarter earnings of 78 cents has moved marginally upward in the past month. The figure indicates a 12.4% plunge from the year-ago quarter’s reported figure.
Key Factors to Note
Per the Fed’s latest data, while there was consumer loan growth, the pace of increase decelerated in the third quarter. Also, the government announced its debt relief program and extended payment moratoriums through December 2022. The moratorium extension has created uncertainty in origination volumes and lowered the demand for refinance loans for student lenders like NAVI. This is expected to have affected the company’s NII in the third quarter.
The consensus estimate for NII for the third quarter is pegged at $291.9 million, suggesting a year-over-year decline 2.4%.
The increasing interest rate environment (a 150-basis-point increase in the third quarter) is anticipated to have affected its net interest margin in the Federal Education Loans and Consumer Lending segments.
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 are expected to have continued to affect revenues in the Business Processing segment.
The consensus estimate for servicing revenues is pegged at $17 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 6.8% to $82 million.
With this, the Zacks Consensus Estimate of $104 million for total fee income indicates a decline of 22.4% from the prior quarter’s reported figure.
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, affecting bottom-line growth.
Nonetheless, NAVI earlier announced plans to repurchase $400 million of its common stock in the ongoing year. As of the second-quarter end, the company had $180 million of its targeted amount remaining to be repurchased through 2022 end. Hence, we expect the company to have continued its repurchase activities in the quarter under review.
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 +2.56%.
Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell).
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 Civista Bancshares (CIVB - Free Report) is +5.88% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report third-quarter 2022 results on Oct 27.
Over the past week, the Zacks Consensus Estimate for CIVB’s quarterly earnings has been revised marginally upward.
The Earnings ESP for QCR Holdings (QCRH - Free Report) is +5.71% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2022 results on Oct 26.
Over the past month, the Zacks Consensus Estimate for QCRH’s quarterly earnings has been unrevised.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.