Navient (NAVI) AI Stock Analysis

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Navient

(NASDAQ:NAVI)

55Neutral

Navient's stock score of 55 reflects a company navigating through financial challenges yet showing potential for strategic growth. While strong gross margins and operational efficiency are strengths, inconsistent revenue growth and high leverage present risks. Technical indicators and valuation provide some positive outlook, though financial stability remains a key concern.

Positive Factors

Prepayment Risk

The prepayment risk in the FFELP portfolio has diminished significantly, providing a favorable risk-reward setup.

Stock Upgrade

Navient Corp. shares have been upgraded from Neutral to Buy based on a sum-of-the-parts analysis.

Strategic Actions

Phase 1 of strategic actions already in motion, cutting ~$120M/yr of shared/corp. costs from the expense base, accelerating buybacks to $65M.

Negative Factors

Earnings Guidance

2025 EPS guide came in lighter at $1.00-1.20 on weaker NIM.

Government Services Sale

The sale of the Government Services business is expected to pressure 4Q EPS, indicating potential financial challenges.

Net Interest Income

Navient reported adjusted EPS significantly below consensus, driven by lower net interest income, higher provision expenses, and higher operating expenses.

Navient (NAVI) vs. S&P 500 (SPY)

Market Cap

$1.14B

Dividend Yield5.72%

Average Volume (3M)833.84K

Price to Earnings (P/E)9.5

Beta (1Y)1.04

Revenue Growth-14.40%

EPS Growth-34.34%

CountryUS

Employees2,100

SectorFinancial

Sector Strength85

IndustryFinancial - Credit Services

Share Statistics

EPS (TTM)1.17

Shares Outstanding102,276,306

10 Day Avg. Volume926,015

30 Day Avg. Volume833,836

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.18

Price to Cash Flow (P/CF)42.60

P/FCF Ratio0.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$12.67

Price Target Upside14.45% Upside

Rating ConsensusHold

Number of Analyst Covering7

Navient Business Overview & Revenue Model

Company DescriptionNavient Corporation (NAVI) is a leading provider of education loan management and business processing solutions. The company operates primarily in two sectors: education loan servicing and asset recovery. Navient's core services include managing student loans for millions of borrowers and providing business processing services to government clients, including federal, state, and local agencies.

How the Company Makes MoneyNavient makes money through several key revenue streams. Primarily, it generates revenue from servicing student loans, which includes collecting payments, managing accounts, and providing customer service for both federal and private education loans. Additionally, Navient earns revenue from asset recovery services, which involves the collection of overdue payments on defaulted student loans and other receivables. The company also benefits from its business processing solutions, offering services to various government and healthcare clients. Significant factors contributing to Navient's earnings include its contractual agreements with the U.S. Department of Education and its partnerships with financial institutions for private loan servicing.

Navient Financial Statement Overview

Summary

Navient's financial performance shows a mixed picture. Strong gross profit margins and operational efficiency are offset by inconsistent revenue growth and low net profit margins. High leverage and low equity ratios indicate financial risks, while cash flow generation remains strong but inconsistent.

Income Statement

Neutral

Navient's income statement reveals moderate challenges. The gross profit margin for 2024 was approximately 91.7%, indicating strong profitability before operating expenses. However, the net profit margin significantly declined to 3.44%, suggesting that higher operating or non-operating expenses impacted profitability. Revenue growth has been inconsistent, with substantial fluctuations observed over the years, including a decrease from 2023 to 2024, indicating potential instability in revenue streams. EBIT and EBITDA margins remained robust at around 73.9% for 2024, reflecting effective operational management despite revenue volatility.

Balance Sheet

Negative

The balance sheet reflects high leverage, with a debt-to-equity ratio of approximately 1.94 in 2024, indicating potential financial risk due to reliance on debt financing. The equity ratio stood at around 5.1%, showing limited equity financing compared to total assets. Return on equity was relatively low at 4.96% for 2024, pointing to inefficient equity utilization. These metrics suggest challenges in financial stability and potential vulnerability to interest rate fluctuations.

Cash Flow

Neutral

Navient's cash flow statement shows a mixed performance. Operating cash flow to net income ratio was approximately 3.50 in 2024, indicating strong cash generation relative to net income. However, free cash flow growth has been inconsistent, and free cash flow to net income ratio was approximately 3.50, reflecting reliance on operational efficiency for cash generation. The company has managed to maintain positive operating cash flow, but fluctuating free cash flow suggests potential challenges in maintaining cash reserves.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.81B	1.28B	1.74B	2.21B	1.69B
	Gross Profit
3.49B	4.40B	1.18B	1.00B	724.00M
	EBIT
2.81B	346.00M	2.93B	936.00M	532.00M
	EBITDA
2.81B	3.95B	2.93B	2.66B	0.00
	Net Income Common Stockholders
131.00M	228.00M	645.00M	717.00M	412.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.10B	839.00M	1.53B	905.00M	1.18B
	Total Assets
51.79B	61.38B	70.80B	80.61B	87.41B
	Total Debt
5.13B	57.30B	66.90B	76.98B	83.94B
	Net Debt
3.03B	56.46B	65.36B	76.07B	82.76B
	Total Liabilities
49.15B	58.62B	67.82B	78.00B	84.97B
	Stockholders Equity
2.64B	2.76B	2.98B	2.60B	2.43B
Cash Flow		Free Cash Flow
459.00M	676.00M	305.00M	702.00M	987.00M
	Operating Cash Flow
459.00M	676.00M	305.00M	702.00M	987.00M
	Investing Cash Flow
8.47B	7.36B	10.59B	6.67B	6.45B
	Financing Cash Flow
-9.62B	-10.05B	-9.66B	-7.33B	-7.68B

Navient Technical Analysis

Technical Analysis Sentiment

Negative

Last Price11.07

Price Trends

50DMA

13.03

Negative

100DMA

13.53

Negative

200DMA

14.23

Negative

Market Momentum

MACD

-0.61

Positive

RSI

36.52

Neutral

STOCH

30.69

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NAVI, the sentiment is Negative. The current price of 11.07 is below the 20-day moving average (MA) of 12.18, below the 50-day MA of 13.03, and below the 200-day MA of 14.23, indicating a bearish trend. The MACD of -0.61 indicates Positive momentum. The RSI at 36.52 is Neutral, neither overbought nor oversold. The STOCH value of 30.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NAVI.

Navient Risk Analysis

Navient disclosed 32 risk factors in its most recent earnings report. Navient reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Navient Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SLM	76 Outperform	$5.49B	9.73	30.11%	1.80%	4.90%	11.33%
SEZL	68 Neutral	$1.33B	19.45	142.86%	―	70.14%	1359.37%
Sector *	63 Neutral	$12.75B	9.36	8.64%	84.32%	13.82%	-3.89%
OMF	63 Neutral	$5.15B	10.18	15.96%	9.30%	7.96%	-20.11%
NAVI	55 Neutral	$1.14B	9.47	4.85%	5.72%	-14.40%	-34.34%
LC	53 Neutral	$1.08B	20.62	3.96%	―	3.63%	27.77%
CURR	34 Underperform	$73.98M	―	-907.81%	―	―	-104.65%

* Financial Sector Average

Performance Comparison

NAVI

Navient

11.07

-4.35

-28.21%

SLM

26.28

6.10

30.23%

LendingClub

9.38

1.77

23.26%

OMF

OneMain Holdings

44.10

0.51

1.17%

CURR

Currenc Group

1.47

-10.06

-87.25%

SEZL

Sezzle Inc.

42.74

32.01

298.32%

Navient Earnings Call Summary

Earnings Call Date: Jan 29, 2025 | % Change Since: -24.07% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a company in transition, achieving significant strategic milestones and cost reductions while facing challenges such as losses in core earnings, increased delinquencies, and restructuring costs. While the highlights demonstrate strong strategic execution and growth in consumer lending, the lowlights highlight ongoing financial and operational challenges.

Highlights

Achievement of Strategic Goals

Navient successfully met its ambitious goal of finalizing several key transactions during 2024 on an aggressive timeline, including the divestment of government services and the sale of its healthcare business.

Strong Consumer Lending Growth

Consumer Lending business generated strong loan origination growth during 2024 with refinance volume growth exceeding $1 billion, 60% higher than the prior year, and in-school volume growing 13%.

Cost Reduction Success

Navient achieved significant cost reductions, yielding $120 million in annual savings, which equates to nearly 40% of the shared costs and overhead being reduced without affecting growth capabilities.

Positive Impact of Healthcare Sale

The sale of the healthcare business unlocked value in a non-strategic business, allowing Navient to increase share repurchases and retire unsecured debt.

Lowlights

Core Earnings Loss

Navient reported a core earnings loss per share of $0.24 in Q4, with adjustments leading to an adjusted core earnings of $0.25 per share.

Increased Delinquencies and Provisions

Delinquencies in both FFELP and private portfolios increased, leading to a $32 million build in reserves for private education loans due to reduced collections.

Regulatory and Restructuring Costs

The company incurred $0.06 per share in regulatory and restructuring expenses related to strategic actions and the settlement of the CFPB lawsuit.

Delayed Government Services Sale

The sale of the government services business was delayed, resulting in a $0.20 loss per share due to a contract loss and impaired value.

Company Guidance

During Navient's fourth-quarter earnings call for 2024, the company provided detailed guidance for 2025, emphasizing several key financial metrics and strategic initiatives. Navient reported a GAAP earnings per share of $0.22 for the quarter and a full-year GAAP EPS of $1.18. On a core earnings basis, the fourth-quarter results were a loss per share of $0.24, with a full-year core EPS of $2. The guidance for 2025 projects core earnings per share to range between $1.00 and $1.20, excluding $0.26 of expenses related to transition services agreements. The company anticipates a 30% growth in loan originations, primarily in the second half of the year, and expects to maintain a net interest margin between 270 and 280 basis points for its Consumer Lending segment. Navient plans to continue optimizing its cost structure, targeting a reduction of $120 million in annual expenses, and aims to capitalize on potential opportunities from federal loan policy changes. The company also highlighted its strategic focus on growing its consumer segment and improving shareholder value by leveraging its streamlined operations and potential new product offerings.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.