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Navistar (NAV) Rides on Strong Class 8 Lineup & Cost Savings


On Apr 9, we issued an updated research report on Navistar International Corporation NAV.

In first-quarter fiscal 2018 (ended Jan 31, 2018), Navistar International reported adjusted loss of 24 cents per share, narrower than the Zacks Consensus Estimate of loss of 41 cents. In the year-ago period, the company reported loss of 76 cents per share. During the quarter, its revenues increased 15% year over year to $1.91 billion, lower than the Zacks Consensus Estimate of $1.94 billion. The year-over-year rise in revenues can be attributed to 24% increase in sales volume of the company’s Class 6-8 vehicles in the United States and Canada.

The company gains from the launch of new products. In order to strengthen the Class 8 lineup, it introduced a new 12.4-liter engine – A26 – in February 2017. In first-quarter 2018, the company’s share of trucks with 13-liter engines almost doubled on a year-over-year basis.

Navistar is also likely to benefit from the cost-saving initiatives like engine restructuring, and reductions in discretionary spending and employee headcount. Further, Navistar intends to close non-core businesses and focus on identifying opportunities to restructure the business.

However, the company is incurring additional costs for restructuring actions so as to improve its position and make ongoing changes in the on-highway emissions standards, concerning fuel efficiency, noise and safety.

In the past six months, Navistar has underperformed the industry it belongs to. The company’s shares have plunged 22.8% compared with the industry’s decline of 0.9%.

Navistar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

A few better-ranked stocks in the auto space are Honda Motor Co., Ltd. HMC, Allison Transmission Holdings, Inc. ALSN and Toyota Motor Corporation TM. While both Honda and Allison Transmission Holdings sport a Zacks Rank #1, Toyota carries a Zacks Rank #2 (Buy).

Honda has an expected long-term growth rate of 5.2%. Past year, shares of the company have returned 19.2%.

Allison Transmission has an expected long-term growth rate of 10%. Past year, shares of the company have returned 8.6%.

Toyota has expected long-term growth rate of 6.1%. The shares of the company have advanced 18.6% in the past year.

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