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Navistar (NAV) Q4 Earnings Drive Past Estimates, Rise Y/Y

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Shares of Navistar International Corporation (NAV - Free Report) gained roughly 15.7% yesterday following its strong fourth-quarter fiscal 2018 (ended Oct 31, 2018) earnings report. For the quarter under review, the company recorded earnings of $1.89, beating the Zacks Consensus Estimate of $1.68. This compares favorably with the prior-year quarter’s earnings of $1.36 per share.

Navistar recorded net income of $188 million, up from $135 million in the prior-year quarter.

The company generated $3.32 billion in revenues, which beat the Zacks Consensus Estimate of $3.26 billion. The figure also marks a 28% rise from fourth-quarter fiscal 2017. This year-over-year improvement was primarily driven by a 45% increase in sales volume of Navistar’s Class 6-8 trucks and buses in the United States as well as Canada.

Navistar International Corporation Price, Consensus and EPS Surprise

 

Fiscal 2018 Results

For fiscal 2018, Navistar reported earnings of $340 million or $3.41 per share, up from earnings of $30 million or 32 cents per share in the previous fiscal year.

Revenues for the year went up 20% year over year to $10.25 billion.

Segment Details

During the reported quarter, net sales and revenues at Navistar’s Truck segment were $2.6 billion compared with $1.9 billion in the prior-year quarter. The segment recorded profit of $197 million compared with the year-ago figure of $112 million. This improvement was due to higher volume in the company’s core markets and robust defense results, partly offset by higher commodity and structural costs.

Net sales and revenues at Navistar’s Parts segment were $633 million compared with $626 million recorded in the same period of the last fiscal year. The segment’s profit was $156 million compared with the year-ago figure of $157 million. Results were aided by robust sales of the Fleetrite brand, partly offset by increased freight costs, and development, engineering and SG&A expenses.

Net sales and revenues at the company’s Global Operations segment were $93 million, marking a decline from the year-ago figure of $105 million. Its profit was $4 million compared with $1 million recorded in the fourth quarter of fiscal 2017. Results were aided by higher volume and cost-reduction benefits.

Net sales and revenues at Navistar’s Financial Services segment were $70 million, marking an increase from the year-ago figure of $63 million. It recorded profit of $26 million, flat year over year. The segment’s profit improved due to higher average portfolio balances in Mexico and the United States. However, the rise was offset by increased borrowing costs.

Financial Position

Navistar had cash and cash equivalents of $1.3 billion as of Oct 31, 2018, up from $706 million as of Oct 31, 2017. At the end of fiscal 2018, long-term debt was $4.5 billion, marking an increase from $3.9 billion recorded as of Oct 31, 2017.

During the fiscal year, capital expenditure totaled $113 million, up from $102 million recorded in fiscal 2017.

2019 Guidance

Navistar projects industry retail deliveries of Class 6-8 trucks and buses in the United States, and Canada to be between 395,000 and 425,000 units in the fiscal year 2019. Class 8 retail deliveries are anticipated to be 265,000-295,000 units.

Further, the company’s revenues for fiscal 2019 are expected to be $10.75-$11.25 billion while adjusted EBITDA is anticipated to be $850-$900 million.

Price Performance

Over the past month, Navistar’s stock has lost 3.6%, outperforming 9.6% decrease recorded by the industry it belongs to.

 



Zacks Rank & Stocks to Consider

Navistar currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Fox Factory Holding Corporation (FOXF - Free Report) , Tesla, Inc. (TSLA - Free Report) , and Cooper Tire & Rubber Company (CTB - Free Report) . Fox Factory and Tesla currently sport a Zacks Rank #1 (Strong Buy) while Cooper Tire carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Factory has an expected long-term growth rate of 5%. Shares of the company have increased 31.2% over the past six months.

Tesla has an expected long-term growth rate of 35%. Shares of the company have rallied 13% over the past three months.

Cooper Tire has an expected long-term growth rate of 12%. Over the past three months, shares of the company have gained 12%.

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