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Navient (NAVI) to Report Q2 Earnings: Is a Beat in Store?

Zacks Equity Research
Updated

Navient Corporation NAVI is scheduled to report second-quarter 2018 results on Jul 24, after the market closes. While the company is expected to witness year-over-year growth in earnings, revenues might decline.

The company’s earnings surprise history seems to be decent. It surpassed estimates in three of the trailing four quarters, delivering an average positive surprise of 3.7%.

The Wilmington, DE-based lender’s first-quarter 2018 earnings had missed the Zacks Consensus Estimate due to lower revenues and increase in expenses. However, lower provisions acted as a tailwind.

Navient Corporation Price and EPS Surprise

Navient Corporation Price and EPS Surprise | Navient Corporation Quote

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Over the past three months, shares of Navient have gained 4.6%, outperforming 1% growth of the industry it belongs to.

Will the stock’s rally continue post second-quarter earnings release? To a great extent, it depends on whether the company will be able to beat earnings estimates this time around.

According to our quantitative model, chances of Navient beating the Zacks Consensus Estimate in this quarter are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP:The Earnings ESP for Navient is +2.62%.

Zacks Rank: Navient currently carries a Zacks Rank #2 (Buy).

Activities of the company during the quarter were inadequate to win analysts’ confidence as reflected by earnings estimates remaining stable at 48 cents, over the last seven days. Nevertheless, it reflects a year-over-year improvement of 11.6%. However, Zacks Consensus Estimate for sales of $317 million projects 9.7% decline year over year.

Now let’s have a look at the factors that might impact second-quarter results:

Easing Margin Pressure: Navient’s prime-indexed assets lag the rise in short-term rates by a quarter. As a result, pressure on net interest margin will likely ease and support its top line.

Loans Might increase: Per the Fed’s latest data, student loans are likely to have improved during the April-June quarter.Thus, Navient is likely to report increase in loans balance.

Increased Expenses From Investment in Technology: Navient’s efforts to become a technologically advanced company along with its aim to expand services outside the educational industry is likely to have resulted in elevated expenses.

Other Stocks That Warrant a Look

Here are some other stocks 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.

BankUnited, Inc. BKU has an Earnings ESP of +0.29% and carries a Zacks Rank of 3. The company is slated to release results on Jul 24.

SVB Financial Group SIVB is slated to report second-quarter 2018 results on Jul 26. It has an Earnings ESP of +1.26% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hilltop Holdings Inc. HTH is also slated to release results on Jul 26. It has an Earnings ESP of +0.40% and carries a Zacks Rank #3.

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BankUnited, Inc. (BKU) : Free Stock Analysis Report
 
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