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Navistar (NAV) to Report Q4 Earnings: What's in the Offing?

Navistar International Corporation NAV is slated to report fourth-quarter fiscal 2018 results on Dec 18, before the market opens.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. In fact, it reported earnings beat in all of the trailing four quarters. The average earnings surprise in the trailing four quarters was 71.5%.

In the past six months, Navistar’s shares have outperformed the industry. The company’s shares have lost 32.5% compared with the industry’s decrease of 35.7%.

Navistar International Corporation Price and EPS Surprise


Navistar International Corporation Price and EPS Surprise | Navistar International Corporation Quote

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

High freight rates and improved carrier profit is driving increased demand for trucks, aiding Navistar to gain from its range of products within the portfolio. The company is witnessing growth in Class 8 heavy retail market share, owing to the performance of its LT series on-highway truck and the 12.4-liter A26 engine.

Navistar’s truck segment is increasing its market share, spurred by higher core volumes, particularly Class 8 heavy, and Class 6 and 7 medium-duty trucks. Further, favorable economic conditions, robust industry environment and order backlog is anticipated to support Navistar’s truck segment between the remainder of 2018 and 2019. This impelled the company to raise guidance for fiscal 2018. It projects fiscal 2018 revenues of $10.1-$10.4 billion and adjusted EBITDA of $775-$825 million.

Apart from its existing product line, Navistar is also expected to gain from its latest launches. In the fourth quarter of fiscal 2018, the company introduced the International LT Series MPG Package for fuel efficiency of trucks, and International CV Series for Class 4 and 5 trucks.

However, the extension of supplier-related issues from third-quarter fiscal 2018 might put a constraint to Navistar’s production targets during the fourth quarter as well. Moreover, amplified costs due to increased transportation cost, premium freight and high commodity prices will hamper the profit margin.

Over the past 30 days, the Zacks Consensus Estimate for Navistar’s fourth-quarter and fiscal 2018 earnings have remained unchanged. Further, it has long-term growth rate of 5%.

Earnings Whispers

Our proven model does not conclusively predict earnings beat for Navistar this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Earnings ESP: Navistar’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.68.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Navistar currently carries a Zacks Rank of 3. This, when combined with its Earnings ESP, makes prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcement, especially when the company is witnessing negative estimate revisions.

Peer Releases

Dana Incorporated DAN currently has a Zacks Rank #3. In third-quarter 2018, the company delivered earnings of 77 cents per share, beating the Zacks Consensus Estimate of 74 cents.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone, Inc. AZO presently has a Zacks Rank #2. In the first quarter of fiscal 2019, the company delivered earnings of $13.47 per share, beating the Zacks Consensus Estimate of $12.21.

Tower International, Inc. TOWR currently has a Zacks Rank of 3. In third-quarter 2018, the company delivered earnings of $1.08 per share, beating the Zacks Consensus Estimate of 97 cents.

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