What To Expect From Navient (NAVI) This Earnings Season?

Navient Corporation (NASDAQ:NAVI) is scheduled to report fourth quarter and 2017 results on Jan 23, after the market closes. Both revenues and earnings are expected to decline on a year-over-year basis.

In the third quarter, Navient surpassed Zacks Consensus Estimate for earnings on higher fee income. However, lower net interest income and higher expenses were the headwinds.

The company has a weak surprise history. It lagged earnings estimates in two of the trailing four quarters and delivered an average negative surprise of nearly 1%.

Moreover, activities of the company during the fourth quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings decreased 2.3% over the last 30 days. Also, the figure represents a decline of nearly 2% on a year-over-year basis.

Navient Corporation Price and EPS Surprise

Factors to Influence Q4 Results

Higher Legal Expenses: The company’s legal expenses will likely remain elevated due to the lawsuits filed against it during the quarter.

Increased Expenses from Investment in Technology: Navient acquired a technologically advanced company in the to-be-reported quarter, in line with its aim to expand services outside the educational industry. This initiative will likely elevate expenses.

Easing Margin Pressure: Navient’s prime-indexed assets lag the rise in short-term rates by a quarter. As a result, pressure on net interest margin (NIM) will likely ease. Moreover, with the acquisition of assets of Earnest, consisting of education refinancing, NIM is anticipated to be higher.

Let’s have a look at what our quantitative model predicts:

Our proven model doesn’t conclusively show that Navient will be able to beat the Zacks Consensus Estimate this time around, as it does not have the right combination of two key components. Note that a stock with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better has significantly higher chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for Navient is 0.00%.

Zacks Rank: Navient currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

Associated Banc-Corp (NYSE:ASB) is slated to report results on Jan 25. It has an Earnings ESP of +0.64% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

T. Rowe Price Group (NASDAQ:TROW) has an Earnings ESP of +1.49% and carries a Zacks Rank of 1. It is scheduled to report results on Jan 30.

Federated Investors’ (NYSE:FII) Earnings ESP is +0.86% and it sports a Zacks Rank of 1. The company is expected to release fourth-quarter and 2017 results on Jan 25.

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