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Navistar (NAV) Beats Earnings and Revenue Estimates in Q3

Zacks Equity Research

Navistar International Corporation NAV recorded net income of $156 million or $1.56 per share in third-quarter fiscal 2019 (ended Jul 31, 2019), compared with $170 million or $1.71 per share in the prior-year quarter.

Adjusted earnings per share for the reported quarter were $1.47, which surpassed the Zacks Consensus Estimate of $1.12.

The company generated $3.04 billion in revenues, which beat the Zacks Consensus Estimate of $2.9 billion. The figure also marks a roughly 17% rise from the third quarter of fiscal 2018. The year-over-year improvement was driven by strong volumes gains in Class 6-8 trucks and buses in the United States and Canada, the company’s core markets.

Navistar International Corporation Price, Consensus and EPS Surprise

 

Navistar International Corporation Price, Consensus and EPS Surprise

Navistar International Corporation price-consensus-eps-surprise-chart | Navistar International Corporation Quote

 

Segment in Detail

For the reported quarter, net sales in Navistar’s Truck segment were $2.4 billion, up 25% from the prior-year quarter’s figure. The segment recorded net profit of $167 million compared with $165 million in the year-ago quarter.   

Net sales in Navistar’s Parts segment were $571 million, down 6% year over year. The segment’s profit was $149 million, up 3% on a year-over-year basis. Results were aided by higher U.S. margins and lower inter-company access fees, partly offset by lower Blue Diamond Parts (BDP) volume.

Net sales in the company’s Global Operations were flat year over year at $90 million. Its profit was $1 million compared with $4 million recorded in the third quarter of fiscal 2018.

Net sales in Navistar’s Financial Services segment rose 14% year over year to $74 million. It recorded profit of $30 million compared with $23 million recorded in the prior-year quarter. The segment’s profit improved owing to higher interest margins as well as other income from an intercompany loan, which were partly offset by the write-off of debt issuance costs.

Financial Position

Navistar had cash and cash equivalents of $1,160 million as of Jul 31, 2019, down from $1,320 billion as of Oct 31, 2018. At the end of the quarter, long-term debt was $4.53 billion, essentially flat compared with $4.52 billion as of Oct 31, 2018.

In the first nine months of fiscal 2019, capital expenditure totaled $90 million, up from $79 million recorded in the same period of fiscal 2018.

Fiscal 2019 Guidance

For the fiscal year, Navistar projects industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada to be between 435,000 units and 455,000 units compared with 425,000 units and 445,000 units mentioned earlier. Further, Class 8 retail deliveries are anticipated in the range of 295,000-315,000 units compared with previously stated 290,000-310,000 units.

The company expects revenues in the band of $11.25-$11.75 billion, unchanged from earlier expectations. Also, adjusted EBITDA projections were unchanged in the range of $875-$925 million.

Zacks Rank & Stocks to Consider

Navistar currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader auto sector are SPX Corporation SPXC, sporting a Zacks Rank #1 (Strong Buy) as well as General Motors Company GM and Oshkosh Corporation OSK, both currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SPX has an expected earnings growth rate of 22.7% for 2019. The stock has gained 35.2% year to date.

General Motors has an expected earnings growth rate of 3.1% for 2019. The stock has gained 14.3% year to date.

Oshkosh has an expected earnings growth rate of 26.6% for 2019. The stock has gained 12.6% year to date.

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