Is A Beat In Store For Navient (NAVI) In Q1 Earnings?

Navient Corporation (NASDAQ:NAVI) has a high chance of beating earnings expectations when it reports first-quarter 2017 results on Apr 18, after the market closes.

In the prior-year quarter, the company missed the Zacks Consensus Estimate by a penny due to lower net interest income and higher expenses. However, lower provision for credit losses and higher non-interest income were tailwinds.

Why a Likely Positive Surprise?

Our proven model shows that Navient has the right combination of two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to deliver a positive earnings surprise.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.33%. This is a major indicator of a likely positive earnings surprise. (You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter)

Zacks Rank: Navient carries a Zacks Rank #3.

Further, the company has a decent earnings surprise history. Navient posted an earnings beat in three of the trailing four quarters, with an average positive earnings surprise of 2.8%.

Navient Corporation Price and EPS Surprise

Navient Corporation Price and EPS Surprise | Navient Corporation Quote

Factors to Influence Q1 Results

Benefit from continued new acquisitions of student loans: The student loans market has turned into one of the biggest consumer debt markets of the nation. Though conditions in the financial markets have been challenging lately, Navient’s consistent efforts to acquire student loan portfolios, both Federally Guaranteed Student Loans (FFELP) as well as Private Education Loans, should lend some support to quarterly results.

Growth in asset recovery revenues: The company’s efforts to grow asset recovery revenues, with focus beyond student loan platforms, should support revenues at its business services segment. The company is likely to continue benefiting from its previous acquisitions of asset recovery and business process outsourcing firms.

Easing Margin Pressure: Owing to the recent interest rate hikes, we expect margin pressure to slightly ease in the to-be-reported quarter.

Navient’s activities during the quarter were inadequate in winning analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter declined to 43 cents per share over the last seven days.

Stocks That Warrant a Look

Here are some stocks worth considering in the finance space, as they have the right combination of elements to post an earnings beat this quarter.

Goldman Sachs Group, Inc. (NYSE:GS) has an Earnings ESP of +0.37% and carries a Zacks Rank #3. The company is slated to release results on Apr 18. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comerica Incorporated (NYSE:CMA) has an Earnings ESP of +0.99% and carries a Zacks Rank #3. The company is slated to release results on Apr 18.

BB&T Corporation (NYSE:BBT) has an Earnings ESP of +4.29% and a Zacks Rank #3. It is scheduled to report first-quarter results on Apr 20.

Sell These Stocks. Now.

Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>.