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Consumer Loan Growth to Drive Navient's (NAVI) Q3 Earnings

Zacks Equity Research

Navient Corporation NAVI is scheduled to report third-quarter 2019 results on Oct 22, after market close. While the company’s earnings are expected to have increased on a year-over-year basis, revenues might have declined.

This Wilmington, DE-based lender’s second-quarter 2019 earnings surpassed the Zacks Consensus Estimate, primarily backed by higher fee income and lower provisions. However, fall in net interest income and loans acted as headwinds.

Further, the company has an impressive surprise history. Navient outpaced earnings estimates in each of the trailing four quarters, the average positive surprise being 20.9%.

Navient Corporation Price and EPS Surprise

Navient Corporation Price and EPS Surprise

Navient Corporation price-eps-surprise | Navient Corporation Quote

Notably, activities of the company during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 56 cents has remained stable over the past 30 days. Also, it indicates an improvement of 5.7% from the year-ago reported figure.

The consensus estimate for sales of $295.3 million implies 3.5% decline.

Key Factors

Higher Loans: Per the Fed’s latest data, consumer lending scenario remained decent during the quarter. Thus, Navient is likely to have witnessed an increase in overall loan balances.

Lower Non-Interest Income: Weakness in fee income might have kept Navient’s top line under pressure in to-be-reported quarter. The Zacks Consensus Estimate of $61 million for servicing revenues indicates a decline of 12.9% from the year-ago reported number. The consensus estimate for asset recovery revenues reflects a rise of 2.8%.

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 conclusively 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 -3.57%.

Zacks Rank: The stock currently carries a Zacks Rank of 3.  

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.

BOK Financial Corporation BOKF is slated to release results on Oct 23. The company has an Earnings ESP of +1.50% and carries a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for Cullen/Frost Bankers CFR is +0.07% and it also carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 24.

Huntington Bancshares Incorporated HBAN is scheduled to release results on Oct 24. The company has an Earnings ESP of +0.60% and carries a Zacks Rank #3.

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Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report
 
BOK Financial Corporation (BOKF) : Free Stock Analysis Report
 
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