Navistar Strong on Backlog Amid Difficult Industry Conditions

On June 14, we issued an updated research report on Navistar International Corporation NAV.

Improved market share, and robust sales of Class 6-8 trucks and buses in the United States and Canada are driving the Illinois-based manufacturer of trucks, engines and buses. Early this month, Navistar reported second-quarter fiscal 2019 earnings. In the reported quarter, its adjusted earnings per share and revenues surpassed the respective Zacks Consensus Estimate.

In fact, strong product backlogs encouraged Navistar to raise its guidance for fiscal 2019. For the current quarter, the company expects revenues to be $11.25-$11.75 billion compared with the previously mentioned $10.75-$11.25 billion. Further, adjusted EBITDA is projected to be $875-$925 million, marking an increase from prior $850-$900 million.

Navistar International Corporation Price and Consensus


Navistar International Corporation Price and Consensus

Navistar International Corporation price-consensus-chart | Navistar International Corporation Quote

Apart from backlogs, the company is profiting from an upgraded product line, launched over the past few years. Its range of enhanced trucks and buses with alternative powertrains improved its market share. Also, product launches are well received by customers, driving the market share further.

However, the present market scenario, if lingers for a long duration, might hurt Navistar’s financials. Declining freight demand and reduction in used truck pricing are concerns. Over the first six months of 2019, Class 8 truck orders plunged 63% from the figure reported in the same period of 2018. Reduced industry order activity, if lingers for a prolonged period, can hurt the company’s top line.

Price Performance

Over the past three months, shares of Navistar have gained 3.5% against the industry’s 0.1% decline.



Zacks Rank & Stocks to Consider

Navistar currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are Bridgestone Corporation BRDCY, Cummins Inc. CMI and Oshkosh Corporation OSK, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bridgestone has an expected long-term growth rate of 4.1%. The stock has gained 0.9% in the past three months.

Cummins has an expected long-term growth rate of 8.02%. The stock has gained 2.1% in the past three months.

Oshkosh has an expected long-term growth rate of 11.6%. Over the past three months, shares of the company have gained 4.5%.

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