It has been about a month since the last earnings report for Navigant (NCI). Shares have added about 15.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Navigant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Navigant Beats Earnings and Revenue Estimates in Q2
Navigant reported solid second-quarter 2019 results wherein both earnings and revenues outpaced the Zacks Consensus Estimate.
Adjusted earnings per share (from continuing operations) of 29 cents beat the consensus estimate by 7 cents and came ahead of the year-ago figure by 11 cents. The bottom line benefited from strong operating performance, favorable net interest costs, lower depreciation and amortization and lower share count in the current year period.
Total revenues of $223.1 million increased 20.8% from the prior-year quarter. Revenues before reimbursements (RBR) of $196.6 million beat the consensus estimate by $10 million and improved 19% year over year. The top line benefited from robust growth in managed services (including solid performance at the Health System Solutions [HSS] venture, which started its operations in July 2018) and continued solid growth in Healthcare and Energy consulting. These were, however, partially offset by lower RBR within the Financial Services Advisory and Compliance (FSAC) segment.
Apart from releasing its earnings report, Navigant announced that it will be acquired by Guide house (a portfolio company of Veritas Capital) in a $1.1 billion all-cash transaction. Per the proposed merger, subject to shareholder and regulatory approval and fulfilment of other customary closing conditions, Navigant shareholders will receive $28.00 in cash for each Navigant share upon closing of the transaction.
Revenues by Segments
Healthcare segment’s RBR of $127.4 million increased 39.1% year over year, driven by improved demand for Healthcare consulting services and solid contributions from HSS. Energy segment’s RBR of $40 million increased 9.3% year over year on the back of continued solid demand for Energy expertise from both commercial and government clients, particularly in North America. The FSACsegment recorded RBR of $29.1 million, down 21.4% year over year due to slowdown of a large monitorship engagement and continued softness related to segment performance.
Adjusted EBITDA from continuing operations in the second quarter of 2019 came in at $20.9 million, up 19% from the prior-year quarter. The upside was driven by robust performance of the HSS joint venture and solid margin expansion in Healthcare consulting.
Balance Sheet and Cash Flow
Navigant exited second-quarter 2019 with cash and cash equivalents of $90.63 million compared with $107.22 million at the end of the prior quarter. The company generated $13.45 million of net cash from operating activities in the reported quarter. Adjusted free cash flow was $14.98 million. Capital expenditures were $5.45 million.
Share Repurchases & Dividend Payment
During the second quarter of 2019, Navigant repurchased 983,000 shares at an aggregate cost of $20.8 million and average price of $21.11 per share. The company paid out $1.93 million in dividend in the quarter.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Currently, Navigant has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Navigant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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