Navient (NAVI) to Report Q2 Earnings: What's in the Cards?

Navient Corporation NAVI is scheduled to report second-quarter 2020 results on Jul 21, after market close. The company’s earnings and revenues are expected to have declined on a year-over-year basis.

This Wilmington, DE-based lender’s first-quarter 2020 earnings lagged the Zacks Consensus Estimate on a fall in revenues. Also, a surge in provisions was a headwind. Yet, stable expenses and higher private education loans were positive factors.

Notably, the company has an impressive surprise history. Navient outpaced earnings estimates in three of the trailing four quarters and lagged in one, the average surprise being 9.03%.

Navient Corporation Price and EPS Surprise


Navient Corporation Price and EPS Surprise

Navient Corporation price-eps-surprise | Navient Corporation Quote

Activities of the company during the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 48 cents has been unchanged over the past 30 days. Also, it indicates a fall of 35.1% from the year-ago reported figure.

The consensus estimate for sales of $284.5 million indicates a 2.9% year-over-year decline.

Key Factors to Note

Decline in Net Interest Income (NII): Per the Fed’s latest data, the consumer lending scenario remained almost stable during the quarter on a sequential basis. Thus, Navient is likely to have witnessed an increase in overall loan balances. Despite loan growth, the company’s NII is expected to have witnessed a fall in the quarter because of lower interest rates. Notably, in March, the Federal Reserve reduced interest rates to near-zero to protect the economy from the impacts of the coronavirus outbreak.

Lower Non-Interest Income: Weakness in fee income might have kept Navient’s top line under pressure in the to-be-reported quarter. The Zacks Consensus Estimate of $57 million for servicing revenues indicates a decline of 5% from the year-ago quarter. The consensus estimate for asset recovery revenues reflects a year-over-year fall of 11.4%.

Elevated Expenses: Navient’s initiatives to become a technologically advanced company and its aim to expand services outside the educational industry are likely to have resulted in elevated expenses.

Here is what our quantitative model predicts:

Our quantitative model doesn’t predict an earnings beat for Navient this time around. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better 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: The company currently carries a Zacks Rank of 5 (Strong Sell).

Stocks That Warrant a Look

Here are some stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

The Earnings ESP for CullenFrost Bankers, Inc. CFR is +6.27% and the stock carries a Zacks Rank of 3 at present. The company is slated to report second-quarter numbers on Jul 30. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Huntington Bancshares Incorporated HBAN is set to release earnings figures on Jul 23. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +11.6%.

T. Rowe Price Group, Inc. TROW is scheduled to release quarterly results on Jul 29. The company has an Earnings ESP of +3.91% and it currently sports a Zacks Rank of 1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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