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Navistar's Q4 Earnings & Revenues Beat Estimates, Up Y/Y

Zacks Equity Research
Updated

Navistar International Corporation’s NAV adjusted earnings came in at $1.43 per share in fourth-quarter fiscal 2017 (ended Oct 31, 2017), comfortably beating the Zacks Consensus Estimate of 65 cents. In the year-ago period, the company reported loss of 28 cents.

Navistar recorded net income of $135 million against the net loss of $34 million in the prior-year quarter.

Navistar’s revenues increased 26% year over year to $2.6 billion in the reported quarter, surpassing the Zacks Consensus Estimate of $2.32 billion. This upside was primarily driven by a 31% increase in sales volume of the company’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

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Fiscal 2017 Results

Navistar reported earnings of 32 cents per share for fiscal 2017 versus the loss of $1.19 from the previous fiscal.

Annual revenues grew 6% year over year to $8.6 billion, outpacing the Zacks Consensus Estimate of $8.2 billion.

Segment Details

During the quarter, revenues at Navistar’s Truck segment increased to $1.85 billion, a surge of $457 million from the year-earlier figure. This improvement was primarily on the back of higher volumes of Class 6-8 trucks and buses in the United States and Canada, partially offset by market pressures. The segment recorded an income of $112 million.

Revenues at Navistar’s Parts segment were $626 million, a gain of $13 million compared with the level recorded in the same period last year. This growth was primarily owing to double digit revenue growth from the company’s Fleetrite and the remanufactured parts businesses. The segment registered an income of $157 million, a minor decline from the preceding year. This downside was due to waning margin in Blue Diamond Parts business.

Revenues at Navistar’s Global Operations segment were $105 million, an increase of $18 million from the year-ago quarter. The segment also recorded an income of $1 million during the reported period versus a $2 million loss in the previous year. This rise in year-over-year income is mainly on improved sales in Brazil, partially offset by restructuring charges.

Revenues at Navistar’s Financial Services segment were $63 million in comparison to last year’s tally of $58 million. The segment registered an income of $26 million in comparison to $23 million a year ago. This improvement was primarily driven by higher receivable balances and loss reduction in the company’s Mexico portfolio.

Financial Position

Navistar had cash and cash equivalents of $706 million as of Oct 31, 2017, down from $804 million as of Oct 31, 2016. As of Oct 31, 2017, long-term debt was $3.9 billion in comparison to $4 billion as of Oct 31, 2016.

In fiscal 2017, net cash inflow in operations totaled $109 million in comparison to cash inflow of $267 million in the year-ago period. Capital expenditure totaled $102 million, down from $116 million recorded in the last fiscal.

Guidance

In fiscal 2018, Navistar projects the retail deliveries of Class 6-8 trucks and buses in the United States and Canada within the range of 345,000-375,000 units.

Further, revenues for fiscal 2018 are expected in the range of $9-$9.5 billion. Adjusted EBITDA is anticipated within the band of $675-$725 million in comparison to $582 million in fiscal 2017. Manufacturing cash at fiscal 2018-end is projected at around $1 billion, same as the previous fiscal.

Price Performance

Year to date, shares of Navistar have outperformed the industry it belongs to. The stock has surged 44.4% compared with the industry’s rally of 31.5%.



Zacks Rank & Key Picks

Navistar carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are BMW AG BAMXF, Cummins Inc. CMI and Honda Motor Company HMC, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BMW has an expected long-term growth rate of 4.2%. Over a year, shares of the company have been up 10.1%.

Cummins has an expected long-term growth rate of 11.9%. Year to date, shares of the company have surged 27.3%.

Honda has an expected long-term growth rate of 3.8%. In the last three months, shares of the company have rallied 15.3%.

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Honda Motor Company, Ltd. (HMC) : Free Stock Analysis Report
 
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Zacks Investment Research