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Navistar (NAV) Q3 Earnings Beat Estimates, Revenues Miss

Zacks

Navistar International Corporation NAV reported third-quarter fiscal 2018 (ended Jul 31, 2018) adjusted earnings per share of $1.19, beating the Zacks Consensus Estimate of 93 cents. This compares favorably with the prior-year quarter’s earnings of 37 cents per share.

Navistar recorded net income of $170 million compared with $37 million in the prior-year quarter.

The company’s revenues increased 18% year over year to $2.6 billion in the reported quarter. However, revenues missed the Zacks Consensus Estimate of $2.7 billion. This year-over-year improvement was primarily driven by a 26% increase in sales volume of Navistar’s Class 6-8 vehicles in the United States as well as Canada.

Navistar International Corporation Price, Consensus and EPS Surprise

Navistar International Corporation Price, Consensus and EPS Surprise | Navistar International Corporation Quote


Segment Details

During the quarter under review, net sales at Navistar’s Truck segment increased 25% to $1.9 billion. This improvement primarily occurred on the back of higher volume in the company’s core markets, rise in military sales and a shift in model mix.

Net sales at Navistar’s Parts segment were $605 million, witnessing gain of $19 million compared with the same period last year. The company’s results were aided by strong growth of the Fleetrite brand, partly offset by lower U.S. volume and Blue Diamond Parts sales.

Net sales at the company’s Global Operations segment were $89 million, up 6% year over year. Results were aided by higher engine volumes.

Net revenues at Navistar’s Financial Services segment were $65 million, up by $3 million. This improvement was primarily driven by higher average portfolio balances in Mexico and the United States.

Financial Position

Navistar had cash and cash equivalents of $1 billion as of Jul 31, 2018, up from $706 million as of Oct 31, 2017. As of Jul 31, 2018, long-term debt was $3.89 billion, which was almost the same in comparison with that of Oct 31, 2017.

During the reported quarter, capital expenditure totaled $79 million, down from $93 million recorded in the year-ago quarter.

Guidance

Navistar has raised fiscal 2018 guidance, driven by solid industry conditions. In the fiscal, Navistar projects industry retail deliveries of Class 6-8 trucks and buses in the United States as well as Canada between 390,000 and 410,000 units, up from the previous projection of 380,000-341,000 units.

Further, revenues for fiscal 2018 are expected to be $10.1-$10.4 billion, up from the prior projection of $9.75-$10.25 billion. Adjusted EBITDA is anticipated to be $775-$825 million in comparison with the prior estimation of $725-$775 million. Manufacturing cash at the end of fiscal 2018 is projected at around $1.25 billion, up from the prior projection of $1.2 billion.

Navistar currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the auto space are Fox Factory Holding Corporation FOXF, AB Volvo VLVLY and Honda Motor Co., Ltd. HMC. While Fox Factory and Volvo sport a Zacks Rank #1, Honda carries a Zacks Rank #2.

Fox Factory has an expected long-term growth rate of 16.8%. Over a year, shares of the company have gained 75.5%.

AB Volvo has an expected long-term growth rate of 15%. Over the past two years, shares of the company have grown 48%.

Honda has an expected long-term growth rate of 3%. Shares of the company have risen 1% in the past year.

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