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Navient (NAVI) Q4 Earnings Miss Estimates, NII & Costs Dip
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Navient Corporation (NAVI - Free Report) reported fourth-quarter 2022 core earnings per share of 76 cents against the year-ago core loss of 43 cents per share. This, however, missed the Zacks Consensus Estimate for earnings of 82 cents.
A fall in net interest income (NII) and total other income, as well as higher provisions, hindered the results. However, a decrease in expenses was a tailwind.
Navient’s GAAP net income was $105 million against the net loss of $11 million in the prior-year quarter.
For 2022, core earnings per share were $3.19, comparing unfavorably with the year-ago core earnings of $3.21 and missing the Zacks Consensus Estimate of $3.39. Net income (GAAP) was $645 million or $4.49 per share, down from $717 million or $4.18 per share in 2021.
NII & Expenses Decrease, Provisions Flare Up
NII declined 29% year over year to $223 million in the fourth quarter and missed the Zacks Consensus Estimate of $253.7 million.
In 2021, NII was down 15.8% from the prior-year to $1.12 billion. However, the top line surpassed the Zacks Consensus Estimate of $1.05 billion.
Total other income plunged 33.9% to $109 million. The downside mainly stemmed from a decrease in all components.
Provision for loan losses was $17 million, marking a rise from $5 million in the prior-year quarter.
Total expenses plunged 58.1% to $202 million.
Quarterly Performance of the Segments
Federal Education Loans: The segment generated core earnings of $97 million, down 10.2% year over year.
As of Dec 31, 2022, the company’s net Federal Family Education Loan Program (FFELP) loans were $43.5 billion, down 7.2% sequentially.
Consumer Lending: The segment reported core earnings of $84 million, which decreased 5.6% from the year-ago quarter. Higher provision for loan losses affected the segment’s performance.
Private education loan delinquency rate greater than 30 days was 5% compared with 3.2% in the prior-year quarter.
As of Dec 31, 2022, the company’s private education loans were $18.7 billion, down 2.2% from the prior quarter. In addition, Navient originated $134 million of private education refinance loans in the reported quarter.
Business Processing: The segment reported core earnings of $6 million, plunging 64.7% from the year-ago quarter.
Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, the predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered student-loan assets and distributions from securitization trusts. It might also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), entering into additional Private Education Loan and ABS repurchase facilities or issue additional unsecured debt.
Notably, it had $1,535 million of total unrestricted cash and liquid investments as of Dec 31, 2022.
Capital Deployment Activities
In the fourth quarter, the company paid out $21 million in common stock dividends.In the reported quarter, Navient repurchased shares of common stock for $85 million. As of Dec 31, 2022, there was $600 million of the remaining share-repurchase authority.
Our Take
Navient’s diversified business segments will support revenue growth. It has been an eminent portfolio holder of private education loans. In the fourth quarter, the company recorded decline in expenses.
However, fall in NII and fee income are worrisome.
Navient Corporation Price, Consensus and EPS Surprise
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2023 (ended Dec 31, 2022) earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.11 per share. The bottom line reflects a year-over-year jump of 63.4%.
Results of WAFD were primarily supported by robust loan balances and an increase in NII. However, a substantial increase in provision for credit losses, rising expenses and decrease in other income were headwinds.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2022 earnings of $1.65 per share surpassed the Zacks Consensus Estimate of $1.63. The bottom line rose 6.5% from the prior-year quarter’s earnings of $1.55.
Results of HWC benefited from higher NII, a rise in loan balance and increasing interest rates. However, lower non-interest income, mainly due to higher mortgage rates, was a dampener. Also, higher expenses and a rise in provisions were concerns.
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Navient (NAVI) Q4 Earnings Miss Estimates, NII & Costs Dip
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2022 core earnings per share of 76 cents against the year-ago core loss of 43 cents per share. This, however, missed the Zacks Consensus Estimate for earnings of 82 cents.
A fall in net interest income (NII) and total other income, as well as higher provisions, hindered the results. However, a decrease in expenses was a tailwind.
Navient’s GAAP net income was $105 million against the net loss of $11 million in the prior-year quarter.
For 2022, core earnings per share were $3.19, comparing unfavorably with the year-ago core earnings of $3.21 and missing the Zacks Consensus Estimate of $3.39. Net income (GAAP) was $645 million or $4.49 per share, down from $717 million or $4.18 per share in 2021.
NII & Expenses Decrease, Provisions Flare Up
NII declined 29% year over year to $223 million in the fourth quarter and missed the Zacks Consensus Estimate of $253.7 million.
In 2021, NII was down 15.8% from the prior-year to $1.12 billion. However, the top line surpassed the Zacks Consensus Estimate of $1.05 billion.
Total other income plunged 33.9% to $109 million. The downside mainly stemmed from a decrease in all components.
Provision for loan losses was $17 million, marking a rise from $5 million in the prior-year quarter.
Total expenses plunged 58.1% to $202 million.
Quarterly Performance of the Segments
Federal Education Loans: The segment generated core earnings of $97 million, down 10.2% year over year.
As of Dec 31, 2022, the company’s net Federal Family Education Loan Program (FFELP) loans were $43.5 billion, down 7.2% sequentially.
Consumer Lending: The segment reported core earnings of $84 million, which decreased 5.6% from the year-ago quarter. Higher provision for loan losses affected the segment’s performance.
Private education loan delinquency rate greater than 30 days was 5% compared with 3.2% in the prior-year quarter.
As of Dec 31, 2022, the company’s private education loans were $18.7 billion, down 2.2% from the prior quarter. In addition, Navient originated $134 million of private education refinance loans in the reported quarter.
Business Processing: The segment reported core earnings of $6 million, plunging 64.7% from the year-ago quarter.
Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, the predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered student-loan assets and distributions from securitization trusts. It might also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), entering into additional Private Education Loan and ABS repurchase facilities or issue additional unsecured debt.
Notably, it had $1,535 million of total unrestricted cash and liquid investments as of Dec 31, 2022.
Capital Deployment Activities
In the fourth quarter, the company paid out $21 million in common stock dividends.In the reported quarter, Navient repurchased shares of common stock for $85 million. As of Dec 31, 2022, there was $600 million of the remaining share-repurchase authority.
Our Take
Navient’s diversified business segments will support revenue growth. It has been an eminent portfolio holder of private education loans. In the fourth quarter, the company recorded decline in expenses.
However, fall in NII and fee income are worrisome.
Navient Corporation Price, Consensus and EPS Surprise
Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote
Currently, Navient carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2023 (ended Dec 31, 2022) earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.11 per share. The bottom line reflects a year-over-year jump of 63.4%.
Results of WAFD were primarily supported by robust loan balances and an increase in NII. However, a substantial increase in provision for credit losses, rising expenses and decrease in other income were headwinds.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2022 earnings of $1.65 per share surpassed the Zacks Consensus Estimate of $1.63. The bottom line rose 6.5% from the prior-year quarter’s earnings of $1.55.
Results of HWC benefited from higher NII, a rise in loan balance and increasing interest rates. However, lower non-interest income, mainly due to higher mortgage rates, was a dampener. Also, higher expenses and a rise in provisions were concerns.