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Navistar (NAV) Up 0.1% Since Last Earnings Report: Can It Continue?

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Zacks Equity Research
·3 min read
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It has been about a month since the last earnings report for Navistar (NAV). Shares have added about 0.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Navistar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Navistar Posts Mixed Q1 Results

Navistar reported first-quarter fiscal 2021 adjusted earnings of 5 cents per share, beating the Zacks Consensus Estimate of break-even profit and comparing favorably with the year-ago quarter’s loss of 33 cents. Higher-than-expected sales from global operations unit led to the outperformance. Notably, revenues from the segment totaled $95 million, outpacing the consensus mark of $68 million. However, the truck maker posted total revenues of $1,812 million for the December-end quarter, missing the Zacks Consensus Estimate of $1,991 million. Moreover, the top line also declined from the year-ago level of $1,838 million.

Segmental Performance

The Truck segment’s total net sales were $1,237 million for the reported quarter, compared with $1,242 million in the year-ago period. The segment incurred a net loss of $81 million, wider than $58 million reported in the year-ago quarter. This was due to lower volumes in core markets along with charges relating to warranties and sale of Melrose Park facility.

The Parts segment net sales fell 5.2% from the year-ago quarter to $467 million. The segment’s profit was $111 million, down 6.7% on a year-over-year basis. The segment’s results were impacted by lower volumes in the United States and Canada.

Net sales in the company’s Global Operations amounted to $95 million, up from $68 million recorded in the year-ago quarter. Higher engine volumes and parts sales in South African operations resulted in this upside. The segment reported a income of $6 million versus break-even profit in the corresponding period of 2020.

Net sales in Navistar’s Financial Services segment totaled $51 million, down from $57 million reported in the first-quarter fiscal 2020 amid low interest rates. Consequently, the segment recorded a profit of $12 million compared with the year-ago quarter’s $17 million.

Financial Position

The Illinois-based trucking giant had cash and cash equivalents of $1,261 million as of Jan 31, 2021, lower than $1,843 million on Oct 31, 2020. At fiscal first quarter-end, long-term debt was $4,504 million, down from $4,690 million as of Oct 31, 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 9.9% due to these changes.

VGM Scores

At this time, Navistar has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Navistar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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