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Navistar (NAV) to Invest $250M to Build Truck Plant in Texas

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Navistar International Corporation (NAV - Free Report) is set to invest more than $250 million to build a manufacturing facility in San Antonio, TX. The move comes as part of its four-year plan to grow its market share. The new facility will produce three trucks of different sizes — class 6, class 7 and class 8. The move will likely create jobs for 600 people.

The above-mentioned facility, which is located along Interstate 35, links the company’s supply bases in the southern United States and Mexico. It will lead to reduction in costs, increased profitability and logistic improvements. It will also complement the current production footprint of Navistar, which comprises truck assembly plants in Springfield, OH, and Escobedo, Mexico.

The latest capital injection follows the firm’s recent plan to invest $125 million in Huntsville in partnership with Traton (Germany-based truck maker) to manufacture next-generation powertrains. It will incorporate the most sophisticated lean production methods, allowing reduced conversion expenses and an optimized supply chain. Navistar anticipates a 15% decline in its logistic costs and a 20% reduction in its supply base due to the opening of the plant at Texas. The company expects production to begin at this site approximately 2 years later.

Recently, Navistar unvieled its 2020-2024 strategy, outlining its growth plans and long-term financial outlook. The firm anticipates producing up to 365,000 trucks and buses in 2019. The company’s revenues are estimated to be between $10 billion and $10.5 billion. It plans to raise its EBIDTA margin from 8% to 12% by 2024. The company aims to rev up its market share from 17% to 25% by 2025.

Navistar International Corporation Price and Consensus


Zacks Rank & Stocks to Consider

Navistar currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Auto-Tires-Trucks sector are Lithia Motors (LAD - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), as well as Douglas Dynamics, Inc. (PLOW - Free Report) and SPX Corp. (SPXC - Free Report) , carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lithia Motors has an expected earnings growth rate of 12.8% for 2019. The company’s shares have gained 70.2% year to date.

Douglas Dynamics has an expected earnings growth rate of 11.7% for 2019. The company’s shares have risen 23.5% year to date.

SPX has an estimated earnings growth rate of 22.7% for the current year. Its shares have gained 47.8% year to date.

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