We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Navient (NAVI) Q1 Earnings Lag Estimates as Revenues Fall
Read MoreHide Full Article
Navient Corporation (NAVI - Free Report) reported first-quarter 2020 adjusted core earnings per share of 51 cents that missed the Zacks Consensus Estimate of 72 cents. Also, the bottom line was lower than the year-ago quarter figure of 58 cents.
Core earnings excluded the impacts of certain other one-time items, including restructuring and regulatory-related expenses.
First-quarter results of Navient were affected by lower net interest income and fee income. Also, rise in provisions was a headwind. However, private education loans rose. Moreover, year-over-year stable expenses provided some support.
GAAP net loss for the quarter was $106 million or 53 cents per share against net income of $128 million or 52 cents per share in the year-ago quarter.
NII and Fee Income Fall, Provisions Rise (on core earnings basis)
Net interest income (NII) dipped 1% year over year to $297 million.
Non-interest income declined 16.7% to $175 million. The fall was mainly attributed to lower asset recovery and businessprocessing along with servicing revenues.
Provision for loan losses climbed nearly 25% to $95 million.
Total expenses remained almost stable at $256 million compared with the year-ago quarter. Lower operating expenses were offset by rise in restructuring costs.
Segment Performance
Federal Education Loans: The segment generated core earnings of $119 million, down 6.3% year over year. Lower revenues, partly muted by a fall in expenses, posed as a headwind.
As of Mar 31, 2020, the company’s FFELP loans were $62.5 billion, down 3.2% sequentially.
Consumer Lending: The segment reported core earnings of $54 million, down 16.9% year over year. Higher provisions and lower revenues were the negatives. Net interest margin was 3.31%, down 9 basis points.
Private education loan delinquencies of 30 days or more of $769 million were down $372 million from the prior-year quarter.
As of Mar 31, 2020, the company’s private education loans totaled $22.3 billion, up marginally from the prior quarter.
Business Processing: The segment reported core earnings of $2 million compared with $10 million in the year-ago quarter. Lower expenses were partially offset by a fall in revenues.
Source of Funding and Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, issuance of additional unsecured debt, repayment of principal on unencumbered student-loan assets, and distributions from securitization trusts (including servicing fees). It might also issue term asset-backed securities (“ABS”).
During the reported quarter, Navient issued $1.9 billion in term ABS and $700 million in unsecured debt.
Capital Deployment Activities
In the first quarter, the company repurchased 23 million common shares.
Our Take
Navient’s private education loan portfolio performance continues to encourage us. Also, the company’s prudent cost-management efforts support bottom-line expansion. However, non-interest income declined despite several measures taken to build its base. Additionally, its involvement in improper lending practices is likely to keep legal expenses elevated.
Navient Corporation Price, Consensus and EPS Surprise
Ally Financial (ALLY - Free Report) reported first-quarter 2020 results adjusted loss of 44 cents per share, lagging the Zacks Consensus Estimate for earnings of 71 cents. The figure also deteriorated from the year-ago quarterly earnings of 80 cents per share.
State Street’s (STT - Free Report) first-quarter 2020 adjusted earnings of $1.67 per share comfortably outpaced the Zacks Consensus Estimate of $1.35. Also, the figure was 34.7% higher than the prior-year level.
Bank of Hawaii (BOH - Free Report) delivered first-quarter 2020 positive earnings surprise of 35.9%. Earnings per share of 87 cents surpassed the Zacks Consensus Estimate of 64 cents. However, the bottom line compares unfavorably with $1.43 reported in the prior-year quarter.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Navient (NAVI) Q1 Earnings Lag Estimates as Revenues Fall
Navient Corporation (NAVI - Free Report) reported first-quarter 2020 adjusted core earnings per share of 51 cents that missed the Zacks Consensus Estimate of 72 cents. Also, the bottom line was lower than the year-ago quarter figure of 58 cents.
Core earnings excluded the impacts of certain other one-time items, including restructuring and regulatory-related expenses.
First-quarter results of Navient were affected by lower net interest income and fee income. Also, rise in provisions was a headwind. However, private education loans rose. Moreover, year-over-year stable expenses provided some support.
GAAP net loss for the quarter was $106 million or 53 cents per share against net income of $128 million or 52 cents per share in the year-ago quarter.
NII and Fee Income Fall, Provisions Rise (on core earnings basis)
Net interest income (NII) dipped 1% year over year to $297 million.
Non-interest income declined 16.7% to $175 million. The fall was mainly attributed to lower asset recovery and businessprocessing along with servicing revenues.
Provision for loan losses climbed nearly 25% to $95 million.
Total expenses remained almost stable at $256 million compared with the year-ago quarter. Lower operating expenses were offset by rise in restructuring costs.
Segment Performance
Federal Education Loans: The segment generated core earnings of $119 million, down 6.3% year over year. Lower revenues, partly muted by a fall in expenses, posed as a headwind.
As of Mar 31, 2020, the company’s FFELP loans were $62.5 billion, down 3.2% sequentially.
Consumer Lending: The segment reported core earnings of $54 million, down 16.9% year over year. Higher provisions and lower revenues were the negatives. Net interest margin was 3.31%, down 9 basis points.
Private education loan delinquencies of 30 days or more of $769 million were down $372 million from the prior-year quarter.
As of Mar 31, 2020, the company’s private education loans totaled $22.3 billion, up marginally from the prior quarter.
Business Processing: The segment reported core earnings of $2 million compared with $10 million in the year-ago quarter. Lower expenses were partially offset by a fall in revenues.
Source of Funding and Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, issuance of additional unsecured debt, repayment of principal on unencumbered student-loan assets, and distributions from securitization trusts (including servicing fees). It might also issue term asset-backed securities (“ABS”).
During the reported quarter, Navient issued $1.9 billion in term ABS and $700 million in unsecured debt.
Capital Deployment Activities
In the first quarter, the company repurchased 23 million common shares.
Our Take
Navient’s private education loan portfolio performance continues to encourage us. Also, the company’s prudent cost-management efforts support bottom-line expansion. However, non-interest income declined despite several measures taken to build its base. Additionally, its involvement in improper lending practices is likely to keep legal expenses elevated.
Navient Corporation Price, Consensus and EPS Surprise
Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote
Currently, Navient carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Ally Financial (ALLY - Free Report) reported first-quarter 2020 results adjusted loss of 44 cents per share, lagging the Zacks Consensus Estimate for earnings of 71 cents. The figure also deteriorated from the year-ago quarterly earnings of 80 cents per share.
State Street’s (STT - Free Report) first-quarter 2020 adjusted earnings of $1.67 per share comfortably outpaced the Zacks Consensus Estimate of $1.35. Also, the figure was 34.7% higher than the prior-year level.
Bank of Hawaii (BOH - Free Report) delivered first-quarter 2020 positive earnings surprise of 35.9%. Earnings per share of 87 cents surpassed the Zacks Consensus Estimate of 64 cents. However, the bottom line compares unfavorably with $1.43 reported in the prior-year quarter.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>