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Navient's (NAVI) Q2 Earnings to be Hurt by a Decline in NII
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Navient Corporation (NAVI - Free Report) is scheduled to report second-quarter 2024 results on Jul 24, before market open. NAVI’s quarterly revenues and earnings are anticipated to have declined from the year-ago quarter’s reported level.
This Wilmington, DE-based lender’s first-quarter 2024 earnings surpassed the Zacks Consensus Estimate. Results were driven by a rise in total other income and a fall in expenses. However, a decline in net interest income (NII) dented quarterly results.
NAVI has a disappointing earnings surprise history. Navient’s earnings outpaced estimates in two of the trailing four quarters and missed twice, the negative surprise being 1.17%, on average.
NAVI’s activities in the to-be-reported quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of 41 cents per share has been revised marginally downward in the past month. However, the figure indicates a 41.4% decline from the year-ago reported figure.
The consensus estimate for revenues of $157.3 million indicates a decline of 28.8% from the year-ago reported number.
Key Factors to Note
Per the Federal Reserve’s latest data, demand for consumer loans weakened in the second quarter of 2024. Also, the Fed kept the interest rates at a 23-year high of 5.25-5.5% during the quarter, which deteriorated the funding spread. This is expected to have limited NII growth and margins. As a result, revenues in the Federal Education Loans and Consumer Lending segments are likely to have declined.
The consensus estimate for NII (consumer lending) is pegged at $123.2 million, suggesting a sequential decline of 8.1%.
Recently, student loan forgiveness transfers were processed through MOHELA, in which $55 billion was processed in forgiveness for around 737000 borrowers between Apr 30 to Jul 1. Thus, the Federal Family Education Loan Program's (FFELP) net interest margin (NIM) is expected to have weakened due to more pre-payment pressure linked to forgiveness programs.
The consensus estimate for NII (Federal Education loan) is pegged at $49.3 million, suggesting a sequential decline of 7%.
The consensus estimate for NII is pegged at $158.9 million, suggesting a sequential decline of 2.5%.
The consensus estimate for servicing revenues is pegged at $16.3 million, indicating a 3.9% fall from the prior quarter’s reported figure. The Zacks Consensus Estimate for other income of $5.75 million indicates a 36% plunge from the prior quarter’s reported figure.
The Zacks Consensus Estimate for asset recovery and business processing revenues of $83.9 million indicates an 8.9% rise from the prior quarter’s reported figure. This is likely to have aided the Business Processing segment’s growth.
The Zacks Consensus Estimate for total non-interest income of $109.6 million indicates a rise of 6.4% from the prior quarter’s reported figure.
Nonetheless, Navient’s cost-control initiatives to improve operating efficiency are likely to have reduced its expense base, thereby offering some support to the bottom-line growth.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Navient this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Navient is -2.85%.
Zacks Rank: NAVI currently carries a Zacks Rank of 4 (Sell).
Finance Stocks Worth a Look
A couple of finance stocks that have the right combination of elements to post an earnings beat in the upcoming releases per our model are Capital One
The Earnings ESP for COF is +1.52% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2024 results on Jul 23.
MCO is scheduled to release second-quarter 2024 earnings on Jul 23. The company, which carries a Zacks Rank #2 at present, has an Earnings ESP of +1.07. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Navient's (NAVI) Q2 Earnings to be Hurt by a Decline in NII
Navient Corporation (NAVI - Free Report) is scheduled to report second-quarter 2024 results on Jul 24, before market open. NAVI’s quarterly revenues and earnings are anticipated to have declined from the year-ago quarter’s reported level.
This Wilmington, DE-based lender’s first-quarter 2024 earnings surpassed the Zacks Consensus Estimate. Results were driven by a rise in total other income and a fall in expenses. However, a decline in net interest income (NII) dented quarterly results.
NAVI has a disappointing earnings surprise history. Navient’s earnings outpaced estimates in two of the trailing four quarters and missed twice, the negative surprise being 1.17%, on average.
Navient Corporation Price and EPS Surprise
Navient Corporation price-eps-surprise | Navient Corporation Quote
NAVI’s activities in the to-be-reported quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for second-quarter earnings of 41 cents per share has been revised marginally downward in the past month. However, the figure indicates a 41.4% decline from the year-ago reported figure.
The consensus estimate for revenues of $157.3 million indicates a decline of 28.8% from the year-ago reported number.
Key Factors to Note
Per the Federal Reserve’s latest data, demand for consumer loans weakened in the second quarter of 2024. Also, the Fed kept the interest rates at a 23-year high of 5.25-5.5% during the quarter, which deteriorated the funding spread. This is expected to have limited NII growth and margins. As a result, revenues in the Federal Education Loans and Consumer Lending segments are likely to have declined.
The consensus estimate for NII (consumer lending) is pegged at $123.2 million, suggesting a sequential decline of 8.1%.
Recently, student loan forgiveness transfers were processed through MOHELA, in which $55 billion was processed in forgiveness for around 737000 borrowers between Apr 30 to Jul 1. Thus, the Federal Family Education Loan Program's (FFELP) net interest margin (NIM) is expected to have weakened due to more pre-payment pressure linked to forgiveness programs.
The consensus estimate for NII (Federal Education loan) is pegged at $49.3 million, suggesting a sequential decline of 7%.
The consensus estimate for NII is pegged at $158.9 million, suggesting a sequential decline of 2.5%.
The consensus estimate for servicing revenues is pegged at $16.3 million, indicating a 3.9% fall from the prior quarter’s reported figure. The Zacks Consensus Estimate for other income of $5.75 million indicates a 36% plunge from the prior quarter’s reported figure.
The Zacks Consensus Estimate for asset recovery and business processing revenues of $83.9 million indicates an 8.9% rise from the prior quarter’s reported figure. This is likely to have aided the Business Processing segment’s growth.
The Zacks Consensus Estimate for total non-interest income of $109.6 million indicates a rise of 6.4% from the prior quarter’s reported figure.
Nonetheless, Navient’s cost-control initiatives to improve operating efficiency are likely to have reduced its expense base, thereby offering some support to the bottom-line growth.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Navient this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for Navient is -2.85%.
Zacks Rank: NAVI currently carries a Zacks Rank of 4 (Sell).
Finance Stocks Worth a Look
A couple of finance stocks that have the right combination of elements to post an earnings beat in the upcoming releases per our model are Capital One
Financial Corporation (COF - Free Report) and Moody's Corporation (MCO - Free Report) .
The Earnings ESP for COF is +1.52% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2024 results on Jul 23.
MCO is scheduled to release second-quarter 2024 earnings on Jul 23. The company, which carries a Zacks Rank #2 at present, has an Earnings ESP of +1.07. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.