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Navistar (NAV) Q1 Earnings Meet Estimates, Revenues Beat

Zacks Equity Research logoZacks Equity Research 3/11/2019 Zacks Equity Research

Navistar International Corporation NAV reported earnings per share of 11 cents in first-quarter fiscal 2019 (ended Jan 31, 2019), in line with the Zacks Consensus Estimate. The company reported loss of 74 cents per share in the prior-year quarter.

During the reported quarter, Navistar recorded net income of $11 million against net loss of $73 million in the prior-year quarter.

The company generated $2.43 billion in revenues, which beat the Zacks Consensus Estimate of $2.23 billion. The figure also marks 28% rise from the first quarter of fiscal 2018. This year-over-year improvement was primarily driven by a 50% increase in sales volume of Navistar’s Class 6-8 trucks and buses in the United States as well as Canada.

Segment Details

During the reported quarter, net sales and revenues at Navistar’s Truck segment were $1.8 billion, up 44% from the prior-year quarter figure. The segment recorded profit of $90 million against loss of $7 million in the year-ago quarter. This improvement was due to higher volume in the company’s core markets, partly offset by higher material and freight costs and the impact of sales of a majority interest in Navistar Defense.

Net sales and revenues at Navistar’s Parts segment were $548 million, down 4% from the same period of the last fiscal year. The segment’s profit was $144 million, up 5% on a year-over-year basis. Results were aided by higher margins and lower inter-company access fees, partly offset by lower BDP volume and higher freight-related expenses.

Net sales and revenues at the company’s Global Operations declined slightly to $73 million. Its profit was $6 million against loss of $7 million recorded in the first quarter of fiscal 2018. Results were aided by higher volume and cost-reduction benefits.

Net sales and revenues at Navistar’s Financial Services segment rose to $74 million. It recorded profit of $31 million, up 55% year over year. The segment’s profit improved due to higher interest margin from improved funding strategies and income from an inter-company loan. However, this rise was offset by higher depreciation expenses on operating leases.

Financial Position

Navistar had cash and cash equivalents of $1.2 billion as of Jan 31, 2019, down from $1.3 billion as of Oct 31, 2018. At the end of Jan 31, 2019, long-term debt was $4.6 billion, almost in line with the figure as of Oct 31, 2018.

During the reported quarter, capital expenditure totaled $44 million, up from $30 million recorded in first-quarter fiscal 2018.

Fiscal 2019 Guidance

The company reiterated its fiscal 2019 guidance.

Navistar projects industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada to be between 395,000 and 425,000 units in fiscal 2019. Class 8 retail deliveries are anticipated to be 265,000-295,000 units.

Further, the company’s revenues for fiscal 2019 are expected to be $10.75-$11.25 billion while adjusted EBITDA is anticipated to be $850-$900 million.

Price Performance

Over the past three months, Navistar’s stock has gained 24%, outperforming 13.4% increase recorded by the industry it belongs to.

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Zacks Rank & Stocks to Consider

Navistar currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Ferrari N.V. RACE, Oshkosh Corp. OSK and General Motors Company GM. While Ferrari currently sports a Zacks Rank #1 (Strong Buy), Oshkosh and General Motors carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari has an expected long-term growth rate of 18.5%. Over the past year, shares of the company have risen 3.6%.

Oshkosh has an expected long-term growth rate of 11.3%. Over the past six months, shares of the company have surged 9%.

General Motors has an expected long-term growth rate of 8.5%. Over the past three months, shares of the company have risen 9.5%.

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