The most recent earnings announcement Navistar International Corporation’s (NYSE:NAV) released in October 2018 signalled that the business benefited from a major tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key growth figures on how market analysts view Navistar International’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for the coming year seems rather muted, with earnings growing by a single digit 7.2%. However, the following year seems to show a contrast, with earnings falling by -6.1%. This volatility continues into the final year of forecast, with earnings generating US$293m.
While it is useful to be aware of the rate of growth each year relative to today’s figure, it may be more insightful to gauge the rate at which the business is growing on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Navistar International’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 0.6%. This means, we can anticipate Navistar International will grow its earnings by 0.6% every year for the next few years.
For Navistar International, there are three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is NAV worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NAV is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NAV? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.