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Navient (NAVI) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Navient Corporation NAVI is scheduled to report first-quarter 2019 results on Apr 23, after market close. Though revenues are expected to decline on a year-over-year basis, earnings are likely to record an upswing.

This Wilmington, DE-based lender’s fourth-quarter 2018 earnings surpassed the Zacks Consensus Estimate primarily due to 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 three of the trailing four quarters, the average positive surprise being 6.6%.

Navient Corporation Price and EPS Surprise

Navient Corporation Price and EPS Surprise | Navient Corporation Quote

However, activities of the company during the first quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 46 cents remained unchanged over the last seven days. Nevertheless, it indicates an improvement of 15% from the prior-year quarter’s reported figure.

The consensus estimate for sales of $304.7 million implies 7.4% decline year over year.

Why a Likely Positive Surprise?

According to our quantitative model, Navient has the right combination of the two key ingredients — positive Earnings ESP and 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 +0.55%.

Zacks Rank:Navient currently carries a Zacks Rank #3.

Factors to Influence Q1 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 will likely ease and support its top line.

Loans Might Increase:Given the rise in student loans during the first quarter, Navient is likely to report an increase in overall loan balances.

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

Northern Trust Corporation NTRS is set to report first-quarter earnings on Apr 23. The company has an Earnings ESP of +0.57% 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 BankUnited BKU is +1.89% and it carries a Zacks Rank of 3, currently. The company is set to report quarterly numbers on Apr 24.

Fifth Third Bancorp FITB has an Earnings ESP of +0.34% and holds a Zacks Rank of 2 (Buy). It is slated to report March quarter-end results on Apr 23.

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