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Navient (NAVI) to Post Q4 Earnings: What's in the Cards?

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Navient Corporation (NAVI - Free Report) is scheduled to report fourth-quarter and full-year 2023 results on Jan 31, before market open. While NAVI’s quarterly revenues are anticipated to have declined from the year-ago level, earnings are expected to have risen.

This Wilmington, DE-based lender’s third-quarter 2023 earnings surpassed the Zacks Consensus Estimate. Results benefited from a rise in core net interest income (NII), while a fall in total other income and elevated expenses were concerning.

NAVI has a mixed earnings surprise history. Navient’s earnings outpaced estimates in two of the trailing four quarters and missed twice, the average beat being 2.24%.

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 fourth-quarter earnings of 77 cents per share remained unchanged in the past month. Nonetheless, the figure indicates a 1.3% rise from the year-ago reported figure.

The consensus estimate for revenues of $210.8 million indicates a decline of 9.2% from the year-ago reported figure.

Key Factors to Note

Per Fed’s latest data, demand for consumer loans showed slight improvement in the fourth quarter. This is expected to have offered some support to NII. Federal Reserve paused interest rate hikes during fourth-quarter 2023. Though interest rates remained at a 22-year high of 5.25-5.5%, deteriorated funding spread is expected to have limited NII growth and margins in the fourth quarter. As a result, revenues in the Federal Education Loans and Consumer Lending segments are likely to have decreased.

The consensus estimate for NII is pegged at $210 million, suggesting a sequential decline of 27.8%.

Also, the Zacks Consensus Estimate for asset recovery and business processing revenues of $87 million indicates a 2.4% rise from the prior quarter’s reported figure. This is likely to have aided the Business Processing segment’s growth.

The consensus estimate for servicing revenues is pegged at $15.6 million, indicating a 4% rise from the prior quarter’s reported figure. The Zacks Consensus Estimate for other income of $5.09 million indicates a 1.8% rise from the prior quarter’s reported figure.

Overall, the Zacks Consensus Estimate for total fee income of $113 million indicates a fall of 13.7% from the prior quarter’s reported figure.

Lastly, 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 in the quarter under review, affecting bottom-line growth.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Navient this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. 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 0.00%.

Zacks Rank: Navient currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Finance Stocks That Warrant a Look                                                                                 

Here are a couple of 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.

T. Rowe Price Group, Inc. (TROW - Free Report) is expected to report fourth-quarter and full-year 2023 results on Feb 8. It has an Earnings ESP of +1.33% and carries a Zacks Rank #3 at present.

Over the past week, the Zacks Consensus Estimate for TROW’s quarterly earnings has moved 1.3% north to $1.60 per share.

Principal Financial Group, Inc. (PFG - Free Report) is scheduled to release quarterly numbers on Feb 12. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +2.00%.

Estimates for PFG’s quarterly earnings have been revised 1% downward to $1.70 over the past week.

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


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