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Navient (NAVI) Q2 Earnings Beat on Lower Expenses, NII Falls Y/Y
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Navient Corporation (NAVI - Free Report) has reported second-quarter 2024 adjusted earnings per share (excluding restructuring and regulatory-related expenses and Federal Family Education Loan Program [FFELP] and write-off related to loan premium) of 53 cents, surpassing the Zacks Consensus Estimate of 42 cents. It reported 52 cents in the prior-year quarter.
Results were driven by a decline in total expenses. A solid liquidity position was another positive. However, a decrease in net interest income (NII) and other income were headwinds.
Navient’s GAAP net income was $36 million compared with $66 million recorded in the prior-year quarter.
NII & Expenses Fall
NII declined 16.6% year over year to $136 million in the second quarter. Further, it missed the Zacks Consensus Estimate of $157 million.
Total other income declined 9.3% year over year to $117 million.
Provision for loan losses was $14 million, up 27.3% from the prior-year quarter.
Total expenses decreased 7.5% year over year to $185 million.
Quarterly Performance of Segments
Federal Education Loans: The segment generated a net income of $28 million, which declined 63.2% year over year.
As of Jun 30, 2024, the company’s net FFELP loans were $32.9 billion, down 8.2% sequentially.
Consumer Lending: This segment reported a net income of $60 million, which decreased from $75 million reported in the year-ago quarter.
The private education loan delinquency rate greater than 30 days was 5.2% compared with 4.4% in the prior-year quarter.
As of Jun 30, 2024, the company’s private education loans were $16.2 billion, which decreased 2.2% from the prior quarter. Navient originated $222 million of private education refinance loans in the reported quarter.
Business Processing: Segmental net income of $15 million increased from $6 million in the year-ago quarter.
Liquidity
To meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities or issue additional unsecured debt.
Notably, it had $1.08 billion of total unrestricted cash and liquid investments as of Jun 30, 2024.
Capital Distribution Activities
In the second quarter, the company paid out $17 million in common stock dividends.
In the reported quarter, Navient repurchased shares of common stock for $38 million. As of Jun 30, 2024, there was $209 million of the remaining share-repurchase authority.
Our Take
NAVI has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken by the company are expected to support financials in the upcoming period. The company’s second-quarter results reflect lower NII and a rise in provisions, which were concerning. However, reduced expenses offered some support to the bottom-line growth.
Navient Corporation Price, Consensus and EPS Surprise
Ally Financial’s (ALLY - Free Report) second-quarter 2024 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Also, the bottom line reflects a rise of 1% from the year-ago quarter.
ALLY saw a marginal increase in loans. Also, the capital ratios increased, which was a positive. However, a decline in revenues and higher expenses were the undermining factors. Also, an increase in provisions hurt the results to some extent. Probably due to these negatives, shares of the company lost 2.3% following the earnings release.
Artisan Partners Asset Management Inc. (APAM - Free Report) reported second-quarter 2024 adjusted net income per adjusted share of 82 cents, missing the Zacks Consensus Estimate of 87 cents. The bottom line, however, increased 15% from the prior-year quarter.
APAM’s results were adversely affected by the declining assets under management (AUM) balance, along with the rising operating costs. Nonetheless, an increase in Global Funds and Separate accounts resulted in top-line growth. Also, the balance sheet position improved in the reported quarter.
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Navient (NAVI) Q2 Earnings Beat on Lower Expenses, NII Falls Y/Y
Navient Corporation (NAVI - Free Report) has reported second-quarter 2024 adjusted earnings per share (excluding restructuring and regulatory-related expenses and Federal Family Education Loan Program [FFELP] and write-off related to loan premium) of 53 cents, surpassing the Zacks Consensus Estimate of 42 cents. It reported 52 cents in the prior-year quarter.
Results were driven by a decline in total expenses. A solid liquidity position was another positive. However, a decrease in net interest income (NII) and other income were headwinds.
Navient’s GAAP net income was $36 million compared with $66 million recorded in the prior-year quarter.
NII & Expenses Fall
NII declined 16.6% year over year to $136 million in the second quarter. Further, it missed the Zacks Consensus Estimate of $157 million.
Total other income declined 9.3% year over year to $117 million.
Provision for loan losses was $14 million, up 27.3% from the prior-year quarter.
Total expenses decreased 7.5% year over year to $185 million.
Quarterly Performance of Segments
Federal Education Loans: The segment generated a net income of $28 million, which declined 63.2% year over year.
As of Jun 30, 2024, the company’s net FFELP loans were $32.9 billion, down 8.2% sequentially.
Consumer Lending: This segment reported a net income of $60 million, which decreased from $75 million reported in the year-ago quarter.
The private education loan delinquency rate greater than 30 days was 5.2% compared with 4.4% in the prior-year quarter.
As of Jun 30, 2024, the company’s private education loans were $16.2 billion, which decreased 2.2% from the prior quarter. Navient originated $222 million of private education refinance loans in the reported quarter.
Business Processing: Segmental net income of $15 million increased from $6 million in the year-ago quarter.
Liquidity
To meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities or issue additional unsecured debt.
Notably, it had $1.08 billion of total unrestricted cash and liquid investments as of Jun 30, 2024.
Capital Distribution Activities
In the second quarter, the company paid out $17 million in common stock dividends.
In the reported quarter, Navient repurchased shares of common stock for $38 million. As of Jun 30, 2024, there was $209 million of the remaining share-repurchase authority.
Our Take
NAVI has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken by the company are expected to support financials in the upcoming period. The company’s second-quarter results reflect lower NII and a rise in provisions, which were concerning. However, reduced expenses offered some support to the bottom-line growth.
Navient Corporation Price, Consensus and EPS Surprise
Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote
Currently, Navient carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Ally Financial’s (ALLY - Free Report) second-quarter 2024 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Also, the bottom line reflects a rise of 1% from the year-ago quarter.
ALLY saw a marginal increase in loans. Also, the capital ratios increased, which was a positive. However, a decline in revenues and higher expenses were the undermining factors. Also, an increase in provisions hurt the results to some extent. Probably due to these negatives, shares of the company lost 2.3% following the earnings release.
Artisan Partners Asset Management Inc. (APAM - Free Report) reported second-quarter 2024 adjusted net income per adjusted share of 82 cents, missing the Zacks Consensus Estimate of 87 cents. The bottom line, however, increased 15% from the prior-year quarter.
APAM’s results were adversely affected by the declining assets under management (AUM) balance, along with the rising operating costs. Nonetheless, an increase in Global Funds and Separate accounts resulted in top-line growth. Also, the balance sheet position improved in the reported quarter.