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Consumer Loan Growth to Support Navient's (NAVI) Q2 Earnings

Zacks Equity Research

Navient Corporation NAVI is scheduled to report second-quarter 2019 results on Jul 23, after market close. The company’s revenues and earnings are likely to record an upswing on a year-over-year basis.

This Wilmington, DE-based lender’s first-quarter 2019 earnings surpassed the Zacks Consensus Estimate primarily due to higher fee income, lower provisions and expenses. 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 12.1%.

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 second quarter were adequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 54 cents has been revised upward over the last seven days. Also, it indicates an improvement of 10.2% from the prior-year quarter’s reported figure.

The consensus estimate for sales of $299 million implies slight increase.

Why a Likely Positive Surprise?

According to our quantitative model, Navient has the right combination of the two key ingredients — positive Earnings ESPand a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

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 +2.33%.

Zacks Rank: Navient currently sports a Zacks Rank #1 (Strong Buy).

Factors to Influence Q2 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 is likely to ease and support its top line.

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

Elevated Expenses From Investment in Technology:  Navient’s initiatives to become a technologically advanced company, along with its aim to expand services outside the educational industry, are likely to result in elevated expenses.

Other Stocks That Warrant a Look

Here are some other 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.

Ares Capital Corporation ARCC is slated to release results on Jul 30. The company has an Earnings ESP of +1.02% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for UMB Financial Corporation UMBF is +0.06% and it also carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jul 30.

BOK Financial Corporation BOKF is scheduled to release results on Jul 24. The company has an Earnings ESP of +1.16%, and carries a Zacks Rank #3.

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